Coronavirus bringing record $1 trillion of new global corporate debt in 2020: report
“Companies around the world will take on as much as $1 trillion of new debt in 2020, as they try to shore up their finances against the coronavirus, a new study of 900 top firms has estimated.
The unprecedented increase will see total global corporate debt jump by 12% to around $9.3 trillion, adding to years of accumulation that has left the world’s most indebted firms owing as much as many medium-sized countries.
Last year also saw a sharp 8% rise, driven by mergers and acquisitions, and by firms borrowing to fund share buybacks and dividends. But this year’s jump will be for an entirely different reason – preservation as the virus saps profits.
“COVID has changed everything,” said Seth Meyer, a portfolio manager at Janus Henderson, the firm that compiled the analysis for a new corporate debt index. “Now it is about conserving capital and building a fortified balance sheet”.”
Dollar starts week on back foot ahead of data, earnings
“The U.S. dollar edged down in Asian trade on Monday as investors looked to looming economic data from around the world and U.S. corporate earnings to gauge whether the markets’ guarded optimism on the economic outlook is justified.
The greenback had ended its third week of losses on Friday as investors bought into risk-sensitive currencies on bets that the worst of the pandemic’s sweeping impact was over.
The dollar index against a basket of major currencies slipped 0.2% in early Monday trade to 96.452.
U.S. coronavirus cases surged over the weekend, as Florida reported an increase of more than 15,000 new cases in 24 hours, a record for any state, surpassing a peak hit in New York in April.
“Rising coronavirus cases are not positive but at the moment, markets seem to think that there is still some distance to a situation where an overflow of the medical system will force them to put restrictions on the economy,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.”
Coronavirus spike in the dog days of summer saps economy of momentum
“Summer doldrums are taking on a whole new meaning during the coronavirus pandemic. The momentum in the U.S. economy appears to have melted away.
It’s not the July heat that’s at fault, of course. It’s a wave of new outbreaks of COVID-19 across the country that has forced some states to reimpose economic restrictions and others to pause further business reopenings.
Thirty-eight U.S. states have seen a rise in cases in the past 14 days. Harvard Global Health Institute researchers have developed a national tracker to trace the severity of the outbreak on a state-by-state basis, and it’s flashing red for Arizona, Florida, Louisiana, South Carolina and Georgia, with 25 cases per 100,000 people.
The loss of momentum in the recovery is evident in key segments of the economy such as retail and dining out. Some businesses in California, Texas and elsewhere have been ordered to scale back operations again. At the same time, fear of catching the virus has made Americans more reluctant to venture out.”
Gold’s winning streak stretches to five weeks, silver jumps on board
“Precious metals had a big week with gold prices holding critical support above $1,800 an ounce.
But let’s not forget about silver, gold’s baby brother pushing above $19 an ounce and seeing its highest weekly close in four years. But even after these big moves, nearly all analysts across the board see the potential for both metals to move higher.
In a world awash in economic uncertainty due to the unchecked spread of the COVID-19 pandemic, investors are looking for safe-haven assets and paying more attention to precious metals. With yields expected to remain low for the foreseeable future, the only real store of value in the marketplace right now is gold and silver.”