GLOBAL MARKETS-Shares turn cautious as U.S. crude gets crushed

* U.S. May crude futures tumble to 1999-low on supply glut
* European stocks choppy, Tokyo down, S&P 500 futures down
* Corporate earnings, factory surveys loom for the week

By Marc Jones and Wayne Cole
LONDON/SYDNEY, April 20 (Reuters) - Caution recaptured world
markets on Monday as another drubbing for U.S. crude oil futures
kicked off a week of data and earnings that will drive home the
damage being inflicted by global coronavirus lockdowns.
European stocks made a choppy start, with the pan-regional
EUROSTOXX 600 .STOXX swinging in and out of positive territory
in early trading. London's FTSE .FTSE and Germany's DAX
.GDAXI were up 0.2%.
E-Mini futures for the S&P 500 ESc1 slipped nearly 0.5%
too, after Wall Street enjoyed a strong end to last week .N ,
though it barely seemed to reflect the latest violent turbulence
in oil markets.
With some global storage facilities nearly full to capacity,
the 'front-month' May benchmark U.S. crude contract CLc1 was
down $3.40, or 18%, to $14.87 a barrel, having at one point
dived as low as $14.47 a barrel - the lowest since March 1999.
European benchmark Brent was down a more manageable 3%
LCOc1 at $27.30 a barrel, but it all points to the same
problem - too much supply, not enough demand.
"For oil there is a bit of a technical story (with storage),
but still, if energy consumption is down 30% and OPEC reduces
supply by 10%, there is still a large gap," said Rabobank's head
of macro strategy Elwin de Groot.
The equity and other major markets however were still
trading largely on the newsflow of the European virus numbers
gradually coming down, he added.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS eased 0.2% in slow trade, pausing after five
straight weeks of gains.
Japan's Nikkei .N225 fell 1.2%, but Chinese shares .SSEC
edged up 0.4% as a benchmark lending rate was lowered to shore
up the coronavirus-hit economy after it contracted for the first
time in decades. U.S. President Donald Trump said on Sunday that Republicans
were "close" to getting a deal with Democrats on a support
package for small business. The United States has by far the world's largest number of
confirmed coronavirus cases, with more than 750,000 infections
and over 40,500 deaths, according to a Reuters tally.
The S&P 500 .SPX has still rallied 30% from its March low,
thanks in part to the extreme easing steps taken by the Federal
Reserve. The Fed has bought nearly $1.3 trillion of Treasuries
alone, and many billions of non-sovereign debt it would
historically have never gone near.
"The question is, are markets underestimating this in terms
of the long-term impact on the economy. There will be damage and
there will be damage in terms of the consumer psyche,"
Rabobank's de Groot said.
That damage should become all more clear this week with
April global purchasing manager data - seen as some of the most
forward-looking economic gauges - being published on Thursday.
A taster on Monday was that Japan reported its exports down
almost 12% in March from a year earlier, with shipments to the
United States down over 16%. TIMES
In the currency markets, the dollar gained broadly as the
concerns about global growth boosted the safe-haven appeal of
the greenback and weighed on risk-oriented currencies such as
the Australian dollar.
Against a basket of its rivals =USD , the U.S. currency
rose 0.2% to 99.90 and edged closer towards a three-year high of
near 103 hit last month.
It gained about 0.1% on the euro and British pound and 0.2%
on the Japanese yen. It last bought 107.80 yen JPY=EBS and
traded at $1.2478 per pound GBP= and $1.0870 per euro EUR=EBS .
The dollar's gains were despite the latest trader
positioning data showing investors have been ramping up their
short positions or bets against the greenback. Bond markets also suggested investors expected tough
economic times ahead, with yields on U.S. 10-year Treasuries
US10YT=RR steady at 0.63%, from 1.91% at the start of the
year.
"We are dealing with scales of declining economic activity
that nobody has seen before. The potential hit to GDP in the
second quarter this year will probably far exceed what we saw at
the worst point of the financial crisis," Capital Group's
economist Robert Lind said in a note.
Italy's borrowing costs rose meanwhile, heading back towards
last week's one-month highs, reflecting unease before a European
Union summit later this week over how to tackle the economic
fallout of the coronavirus crisis.
Selling pressure on Italian government bonds has returned in
the past week, undoing some of the benefits of the European
Central Bank's massive bond-buying scheme, after euro zone
politicians failed to agree to common debt issuance as a means
of addressing the crisis.
Italian Prime Minister Guiseppe Conte used an interview with
Germany's Sueddeutsche Zeitung on Monday to repeat calls for the
EU to issue common euro zone bonds to demonstrate the bloc's
solidarity in the face of the pandemic. "Thursday is the key day this week with the EU leaders
summit a potentially big event for the future of Europe as they
discuss how close the region can get to joint issuance in the
near future," said Deutsche Bank strategist Jim Reid.

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