Top 5 Things to Know in the Market on Tuesday, March 24th

By Geoffrey Smith

Investing.com -- The U.S.'s 'phase 3' stimulus package remains deadlocked due to disputes over corporate access to government bailout funds. Global stock markets are rebounding vigorously however, as investors focus on the new backstop measures announced by the Federal Reserve on Monday. Italy's epidemic shows tentative signs of easing, while the U.K. goes into full lockdown and Thailand declares a state of emergency. Oil has bounced on hopes that the U.S. will strike a deal with Saudi Arabia to stabilized the market. Here's what you need to know in financial markets on Tuesday, March 24th

1. Senate deal blocked again

The Senate’s package of economic support measures – whose sticker price has risen to $2 trillion – remained stuck, as the Democratic Party objected to the scope and perceived ease of federal aid to large companies.

House Speaker Nancy Pelosi on Monday announced a rival package worth $2.5 trillion that focus on handouts to families and small businesses.

The number of confirmed coronavirus cases in the U.S. continues to accelerate, passing 46,000 according to Johns Hopkins data, while over 500 have died, of which 125 have been in New York City alone.

Elsewhere, Thailand declared a state of emergency while Indonesia registered a sharp increase in new cases.

2. Light at the end of Italy's tunnel?

Italy, the global epicenter of the pandemic at present, recorded the second straight day of declines in confirmed new cases and in deaths, prompting hopes that it could be near an inflection point.

Italian bond and stock markets bounced sharply after a report saying that Germany was willing to approve a loan from the European Stability Mechanism to combat the virus, with little or no conditionality as regards its fiscal policy.

However, German Economy Minister poured cold water on the idea of joint debt issuance by the euro zone. The Eurogroup meets later and is expected to discuss calls for such measures from countries such as Italy, Spain and Portugal.

The U.K., meanwhile, which until Thursday had taken a markedly more relaxed approach to suppressing the spread of the virus, imposed a ban on public meetings of over two people, bringing it into line with much of the rest of Europe.

3. Markets bounce bigly

U.S. stock markets are set to open sharply higher after Asian and European markets looked through the short-term virus impacts to focus on the almost unlimited backstop measures announced on Monday by the Federal Reserve.

Positive noises from Washington – Treasury Secretary Steven Mnuchin and Senate Minority Leader Chuck Schumer both said that a deal on the phase 3 stimulus package was ‘very close’ – also helped.

By 6:55 AM ET (1055 GMT), trading in the main indices futures had been suspended, limit up, after they posted gains of over 5%.

The European benchmark Stoxx 600 was up 5.0%, while Japan’s Nikkei had closed up 7.0%. China’s CSI 300 rose 2.4%.

4. Worst ever PMIs

Markets are also having to look through an extremely negative set of business surveys showing the extent of the disruption to the world economy from the Covid-19 pandemic.

The eurozone composite Purchasing Managers Index published by IHSMarkit fell to a lower-than-expected 31.4 in March, from 51.6 in February. The analogous number for the U.K. fell to 37.1, well below the 45.1 expected.

Across the region, service sector PMIs all slumped much more than manufacturing, reflecting how the retail, travel and entertainment sectors have been paralyzed across the continent.

Markit’s U.S. PMI is due at 9.45 AM ET, while the Richmond Fed’s regional business survey is also expected to follow the dismal example of the Philly Fed index last week.

5. Oil bounces on hope for U.S.-Saudi deal

Oil prices bounced sharply after U.S. Energy Secretary Dan Brouillette hinted at a deal with Saudi Arabia to stabilize the market.

“At some point we will engage in a diplomatic effort down the road. But no decisions have been made on anything of that nature,” wires quoted Brouillette as saying.

By 6:45 AM ET (1045 GMT), U.S. crude futures were up 6.4% at $24.86, while Brent crude was up 4.6% at $28.27 a barrel.

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