Morning Note: The Virus, The economy and the people.
Stock Markets Globally are poised for a mixed start, following the first back-to-back gains for global equities since mid-February, as negotiations in Congress continued toward a vote on the U.S. stimulus bill later this week.
In Asia, earlier, the S&P 500 ended about 1% higher after a rally of more than 5% fizzled amid a dispute in the Senate. Futures in Japan slipped, while contracts gained in Hong Kong and Australia. U.S Republican senators raised objections to the unemployment benefits section of the stimulus bill, and Vermont Senator Bernie Sanders threatened to hold up the legislation unless those objections were dropped.
The dollar declined for a second day against its major peers. Treasuries edged lower.
Elsewhere, gold drifted lower after a squeeze of historic proportions pushed its prices to the biggest one-day gain since November 2008 on Tuesday. The closing of refineries and demand for physical gold had caused a disconnect between prices in London and New York.
As the virus spread and Kenya’s reported an additional one confirmed case of the COVID-19 yesterday and also reported the first recovery of an infected patient. Spain had its deadliest day yet, while in Britain, the government moved to shut Parliament and Prince Charles tested positive. European Union leaders inched toward a rescue package. Germany unleashed a historic bailout. Russian President Vladimir Putin even postponed a public vote on constitutional changes next month that would allow him to rule to 2036. In the U.S. Governor Andrew Cuomo of New York said the stimulus package working its way through Congress is inadequate. In Brazil, President Jair Bolsonaro, echoing Trump, urged the country to resume normal life to protect the economy. That may be too late for Thailand, which faces its biggest economic contraction since the Asian crisis. Singapore reported its biggest daily jump in new cases.
President Kenyatta yesterday issued a raft of measures to curb the economic meltdown caused by the CoronaVirus Pandemic that is now on the verge of getting the country’s economic output to a standstill. The President announced a 100 percent tax relief for Kenyans earning gross salary of less than Sh24,000 and reduced income tax down from 30 percent to 25 percent.
Other measures included:
- 100% tax relief of those earning up to Sh 24,000
- Reduction of PAYE from 30% to 25%
- Reduction of corporate to 25%
- Reduction of Turnover tax from 3% to 1%
- Suspension of listing any Kenyan on credit reference bureaus (CRB)
As the president’s proposal are tabled on parliament, the market may resume relative stability and a wave of unknown investor reaction looms at open. The stimulus package offered by the government could last for a while but is not adequate enough to last the country longer, incase of an increase in the cases which could lead to a total shutdown as has been witnessed in other countries. India effective yesterday went on a lockdown, South Africa is set to follow starting today.
For now, president Kenyatta has put the county on dusk to dawn curfew, only essential service personnel are allowed to move between 7PM and 5AM and the country remains optimistic of a decline in the number of daily cases being reported in the country.
Today, the Nairobi Securities Exchange could still experience a decline in prices but will increasingly express signs of improvement as the global economic optimism resumes. This however, may not last long as global numbers continue to rise and the total deaths surpass the 20,000 mark.