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Top 5 Things to Know in the Market on Monday, April 6th

By Geoffrey Smith -- Crude oil prices have given up some of their Friday gains as a hoped-for deal on production cuts failed to materialize over the weekend. The U.S. is bracing for peak-Covid-19, while Spain and Italy registered further declines in their daily death tolls. That sparked hopes of an end to the crisis in Europe, and the resulting bounce in European stock markets is helping U.S. futures higher. U.K. Prime Minister Boris Johnson was hospitalized with the disease but sterling didn't appear to mind too much. And the dollar is still strongly bid, especially against the yen and selected emerging market currencies. Here's what you need to know in financial markets on Monday, April 6th.

1. Crude prices fall on doubts about production cut deal

Crude oil prices fell as doubts emerged over whether the world’s biggest producers will agree to cut production.

President Donald Trump’s meetings with U.S. oil industry bosses failed to generate any consensus regarding cuts to U.S. output, something that both Saudi Arabia and Russia believe to be a precondition for any cuts on their part.

As such, a meeting of the OPEC+ format, which includes both Saudi and Russia, was postponed to Thursday from Monday. Trump on Saturday raised the possibility of protecting U.S. oil producers by raising import tariffs on foreign oil.

By 6:25 AM ET (1025 GMT), U.S. crude prices were down 4.1% on the day at $27.19 a barrel, while Brent futures were down 3.5% at $32.91.

2. U.S. braces for worst week

President Donald Trump said there was a light at the end of the Covid-19 tunnel, pointing to slowdowns in the rate of new infections in some of the virus hotspots in the U.S. Infections in New York City, Detroit and New Orleans are expected to peak in the next few days, according to various reports.

The U.S. Surgeon-General Jerome Adams, meanwhile, told Fox News on Sunday that the coming week will be “the hardest and saddest week of most Americans’ lives.”

The U.S. has now registered over 9,600 deaths from the coronavirus and has over 337,000 confirmed cases.

3. Stocks set to open higher, lifted by Europe

U.S. stock markets are set to open higher, benefiting from a bounce in Asian and European markets.

By 6:30 AM ET, the Dow Jones 30 futures contract was up 761 points, or 3.6% at 21,718, while the S&P 500 futures contract was up 3.6% and the Nasdaq 100 futures contract was up 3.9%.

Data over the weekend from Spain and Italy, the two European countries worst hit by the virus, showed a fall in the number of daily deaths, and a slowdown in the rate of increase in new infections.

The benchmark Stoxx 600 was up 2.9% by midday in Europe, while the Nikkei and Australian S&P/ASX 200 indices both added more than 4%. Emerging market indices were more mixed.

4. Dollar gains vs yen, emerging market currencies

The dollar showed no sign of retreating, despite the general risk-on tone in markets, holding its ground against developed-market currencies and advancing broadly against emerging market ones on growing fears of sharp economic contractions and balance of payments crises in the latter.

The dollar index, which measures the greenback against a basket of developed-market currencies, was up less than 0.1% at 100.71, down against the Australian and Canadian dollars but up 0.7% against the yen after the Japanese government said it would declare a state of emergency. Japan’s official numbers on Covid-19 cases have risen sharply since the country abandoned hope of staging the 2020 Olympics this summer.

The dollar also made gains against the Indian rupee, Egyptian pound and Turkish lira, although the Russian ruble rebounded, catching up with late Friday’s price action in the oil market.

5. U.K. PM Johnson taken to hospital with Covid-19

Prime Minister Boris Johnson was admitted to hospital late on Sunday in the U.K., as a precautionary measure, Downing Street’s press office said.

Johnson had said over a week ago that he had tested positive for the virus and his appearance in video messages to the country had visibly worsened over the last week.

Sterling shrugged at the development. By 6:30 AM ET, the pound was at $1.2300, up 0.3% from late Friday in Europe. The FTSE 100 stock index was up 2.2%, while the more domestic-focused FTSE 250 was up 4.1%.

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