* U.S. crude plunges 30$ 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 a near 30% drubbing for U.S. WTI crude oil
kicked off a busy week of data and earnings that will drive home
the damage being inflicted by global coronavirus lockdowns.
Europe's stock markets made a groggy start, with the
pan-regional EUROSTOXX 600 .STOXX flopping back into the red
as London's FTSE .FTSE , Germany's DAX .GDAXI and Paris,
Milan and Madrid all fell more than 1%. .EU
E-Mini futures for the S&P 500 ESc1 tumbled nearly 2% too,
after Wall Street had enjoyed a strong end to last week .N ,
though even that barely reflected the carnage in oil markets.
With some global storage facilities nearly full to capacity,
the 'front-month' May benchmark U.S. crude contract CLc1 was
down $5.40, or 29.5%, to just under $13 a barrel - the lowest
since March 1999.
European benchmark Brent was down a more manageable 5%
LCOc1 at $26.60 a barrel, but it all pointed 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.
Equity and other major markets however were still trading
relatively robustly and 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 1.15%, 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 (virus)
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.
DAMAGE
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.
In a taster on Monday, Japan reported its exports down
almost 12% in March from a year earlier, with shipments to the
United States down over 16%. 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 99.98 and edged closer towards a three-year high of
near 103 hit last month and despite the latest trader
positioning data showing bets against the greenback being ramped
up. It gained about 0.15% on the euro and British pound and 0.2%
on the yen. It last bought 107.80 yen JPY=EBS and traded at
$1.2450 per pound GBP= and $1.0860 per euro EUR= .
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
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. "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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