Rating agency Moodys downgraded India’s investment ranking. We can’t promise cheer, but for the rest of the news you need to know in five minutes, here’s Mint Lite
The week began with India’s coronavirus load showing no sign of slowing. The number is nearing two lakh, and we’ve overtaken Germany and France to become the seventh worst affected. Nisarga, a severe cyclonic storm, is gathering speed and threatening Mumbai, already ravaged by the virus and by unemployment. Rating agency Moodys downgraded India’s investment ranking. We can’t promise cheer, but for the rest of the news you need to know in five minutes, here’s Mint Lite.
As lockdown eases, stocks climb
The Indian stock market climbed for a fourth day after the Centre announced plans to start easing the nationwide lockdown from 8 June. Malls, restaurants and places of worship will open after nearly 70 days of lockdown. Stringent rules will be limited to clusters with active cases, and a few states have extended their lockdowns but overall, the markets have responded positively to the promise of reopening. The S&P BSE Sensex and the NSE Nifty 50 Index rose 2.5% at the close of day, marking their longest upward climb since 30 April. Both slid 3% last month after rebounding in April from a record slide on March 23, just before the lockdown officially began on 25 March. Across Asia, the sentiment was fairly positive and shares rose as US President Donald Trump has not specified imposing sanctions over China’s new national security law for Hong Kong. India’s GDP rose 3.1% in the March quarter compared to a year ago, the government said on Friday.
Fewer people take loans in April
More customers have repaid rather than take new loans in April. This trend is expected to continue in May as covid-19 has created uncertainty about jobs and salaries. Thousands are being laid off or forced to take pay cuts. Normally, repayments do exceed new loans in the first month of a new financial year but this is rare, especially when it comes to retail loans, or those taken by individuals. This year, retail loans showed the biggest month-on-month fall in at least 13 years. All categories of loans—from personal and housing to credit cards—have fallen since March (see chart). The biggest drop was in credit card outstanding which shrank 10.28%. Unsecured personal loans shrank 3.7%. Together, they contributed to more than half the fall in total retail loans. For more, read Mark to Market.
US Reopening in Trouble
Fears about the economy, rising unemployment and the virus outbreak have fed into protests against police brutality and ingrained racism in US, further complicating efforts to reopen the country that has been hit hardest by the novel coronavirus. Over 104,000 Americans have died of covid-19, and there is fear that crowds on the streets could lead to a spike in infections. A Bloomberg survey estimates the jobless rate will rise to 20%, the highest since the 1930s. As protests against the brutal killing of George Floyd continued for a seventh night across the country, companies such as Amazon scaled back deliveries again, while Apple shut stores temporarily. Chicago, where damage to property has crossed millions, was set to reopen on Wednesday, but that now seems in doubt. National Guard has been deployed in many cities, and US President Donald Trump has been tweeting out inflammatory messages. In New York City, African-Americans have a higher rate of infection than other races, according to city data. A McKinsey & Co. report found that 39% of jobs held by black Americans are at risk from furloughs or layoffs due to the shutdowns meant to curb the spread of the pandemic.
Covid Fear Bigger Than Brexit
Brexit talks are set to resume on Tuesday but few expect a breakthrough in the discussions on trade and the future relationship. Senior advisers in Brussels and London say they’re unlikely to break the deadlock. This means UK Prime Minister Boris Johnson and EU commission president Ursula von der Leyen will have to meet in the middle of June. This past weekend, EU advisor Stefaan de Rynck said there was little chance of a deal by the 30 June deadline, and said UK needs to be “more realistic" in its demands. Currency traders, however, don’t seem worried about a no-deal Brexit. The pound touched a three-week high against a weaker dollar on Monday. This is an indication that the economic impact of the coronavirus pandemic, unrest in the US ahead of its reopening, and the developments in Hong Kong and worsening US-China relations are of greater concern to investors.
Thailand to go slow on tourism
Thailand on Monday said it will lift all restrictions on business and other activities by 1 July but international tourism is likely to resume only by the end of the year. The country started a phased reopening over the past few weeks. Thailand has recorded zero new locally-contracted cases for a week, and on Monday reported just one new coronavirus case, a man who returned from Russia, and no new deaths. This comes a day after the government approved a $60 billion stimulus package, the country’s biggest ever infusion into the economy, which is expected to contract 6-7% in 2020. for The country is also trying to create its own coronavirus vaccine, with more manpower and resources dedicated to the effort amid hopes it could boost medical tourism. Trials on monkeys began last month, one of at least 100 potential vaccines being developed globally. The government is hopeful it will have a cost-effective vaccine ready for next year.
Curated by Shalini Umachandran. Have something to share with us? Write to us at firstname.lastname@example.org or tweet to @shalinimb