China Cuts Small Banks' Reserve Requirement Ratio

China’s central bank decided to reduce the reserve requirement for small and medium-sized banks by 100 basis points to improve liquidity and shore up the economy hit by the outbreak of coronavirus. The People’s Bank of China, said on Friday, that it will cut the reserve requirement ratio by 50 basis points each on April 15 and May 15. The reduction will release CNY 400 billion liquidity into the financial system. The latest RRR cut was the third so far this year. The reserve ratio will fall to 6 percent for about 4,000 medium and small-sized banks. Further, the central bank lowered the interest rate paid on excess reserves that lenders maintain with the PBoC, to 0.35 percent from 0.72 percent, with effect from April 7. Frequent targeted RRR cuts that release long term liquidity to the market mean that longer-term interest rates should fall, if global risks do not increase suddenly, Iris Pang, an economist at ING said. Though this would not benefit SMEs, which are the most in need, it will ease the interest costs of other corporates that could contribute to the recovery of the economy, even if liquidity is already ample, the economist…

Sweden Services Sector Activity Weakest Since 2012

Sweden’s services sector contracted at the fastest rate in 15 years to hit its lowest level since 2012, survey data from Swedbank and the logistics association SILF showed on Wednesday. The Purchasing Managers’ Index for the services sector decreased to 46.9 in March from 56.4 in February.Any reading below 50 suggests contraction in the sector. The latest monthly decline was the largest in the survey’s fifteen-year history and the reading was the lowest since 2012. The order index and production sub-indices recorded the biggest declines in March followed by employment. The sub-index for the suppliers’ delivery times increased for the second straight month, reaching a record high. “Normally, rising delivery times mean increased demand pressure, but this time it is rather a lack of supply that contributes to longer delivery times partly because of the corona virus and closed borders,” Swedbank analyst Jorgen Kennemar said. Service sector companies plans contracted in March, which indicates a darker economic outlook in the future. The Composite PMI, which combines manufacturing and services, fell to 45.9 in March from 55.4 in the previous month. The material has been provided by InstaForex Company – www.instaforex.com…

UK Service Sector Contracts Most Since 1996

The UK service sector registered its steepest downturn in more than two decades in March due to business shutdowns and order cancellation in response to the coronavirus, or covid-19, pandemic. The services Purchasing Managers’ Index fell to 34.5 in March from 53.2 in February, survey data from IHS Markit and Chartered Institute of Procurement & Supply showed Friday. This was also below the flash reading of 35.7. The score exceeded the previous record low seen at the height of the global financial crisis and suggested the fastest downturn since the survey began in July 1996. Reflecting the output volumes trend, there was a record drop in new work due to a slump in business and consumer spending amid emergency public health measures to halt the spread of virus. New business from abroad fell at an even faster pace in March. A sharp fall in new orders translated into excess business capacity to meet existing workloads. Employment numbers fell for the first time in five months and at the fastest rate since June 2009. A number of companies reported placing staff on furlough. Average cost burdens increased at the slowest pace for just over four years in March. At the…

Latvia Industrial Production Grows In February

Latvia’s industrial production rose for the first time in five months in February, data from the Central Statistical Bureau showed on Friday. Industrial production rose 3.0 percent month-on-month in February, after a 2.0 percent drop in January. On a yearly basis, industrial production increased 0.8 percent in February, after a 4.5 percent decline in the previous month. Mining and quarrying output grew 16.7 percent annually in February and electricity and gas supply rose 7.0 percent. Meanwhile, manufacturing output declined 0.9 percent. The material has been provided by InstaForex Company – www.instaforex.com…

Pound Falls Sharply As U.K. Services PMI Shrinks To Record Low

The pound moved down against its major counterparts in the European session on Friday, as coronavirus cases exceeded one million worldwide and U.K. service sector activity slumped in March amid business shutdowns and order cancellations in response to the coronavirus pandemic. Survey data from IHS Markit/CIPS showed that the U.K. services PMI fell to 34.5 in March from 53.2 in February. This was also weaker than the flash estimate of 35.7. This reading was the lowest since the survey began in July 1996. The composite output index dropped to 36.0 in March from 53.0 in February. The flash score was 37.1. Weak Eurozone purchasing manager data rekindled recession concerns. The IHS Markit eurozone services purchasing managers index slumped to a reading of 26.4 in March from 52.6 in February, the worst-ever reading in the history of the series, as the covid-19 pandemic and associated measures taken to contain the outbreak through Europe weighed heavily on business performance. The pound fell to 132.95 against the yen, from a high of 134.09 set at 7:00 pm ET. The next likely support for the pound is seen around the 127.00 level. The latest survey from Jibun Bank showed that the services…

Russia Service Sector Shrinks On COVID-19 Outbreak

Russia’s service sector deteriorated at the fastest pace in eleven years in March, as employment, new business and foreign client demand decreased amid COVID-19 outbreak, survey data from IHS Markit showed on Friday. The services Purchasing Managers’ Index fell to 37.1 in March from 52.0 in February. The score signaled the fastest decline in eleven years. Any score below 50 indicates contraction in the sector. New business declined at a sharp rate in March as the output decreased. Total sales declined at the quickest since February 2009, as the public health measures were taken to halt the spread of COVID-19 in the country and key export destinations. New export orders declined at the strongest rate since September 2014. Reduction in new orders led to the lowering of business requirements which led to the contraction in the employment in March with the rate of decline fastest since January 2016. Backlogs of works decreased in March with the decline in new business. Business confidence turned negative for the first time since early-2016 and was the lowest in the series history. Some firms noted that customer closures weighed on the sentiment. Cost burdens increased at a strong pace in March and…

Gold Prices Ease On Firm Dollar

Gold prices eased on Friday as the dollar resumed its climb versus major peers
ahead of U.S. nonfarm payrolls data that could provide further clarity on the economic damage from the coronavirus pandemic. Spot gold slid 0.15 percent to $1,611.80 per ounce, while U.S. gold futures were down 0.4 percent at $1,630.60 per ounce. The U.S. Labor Department is scheduled to release its usually closely-watched monthly employment report later today, although the data may be seen as old news as the employment survey was conducted three weeks ago. Economists expect the report to show employment fell by 100,000 jobs in March after an increase of 273,000 jobs in February. The unemployment rate is expected to climb to 3.8 percent from 3.5 percent. The U.S. recession is here and how quickly the country will bounce back will depend upon the course of the viral pandemic, the extent of support the federal government provides and how effectively it may be used to stem millions of job losses, Fed officials said Thursday. Fears are growing that virus-led economic disruptions could be far more punishing and long lasting than initially thought. As coronavirus crisis escalates, Fitch Ratings expects a deep global recession this…