The Wall Street Journal - 07.04.2020

THE WALL STREET JOURNAL. ***** Tuesday, April 7, 2020 |B11

MARKETS

pening on the demand side,”

said Lyn Graham-Taylor, a

strategist at Rabobank.

Strict containment mea-

sures also showed signs of

helping slow the spread of the

virus in parts of Europe, in-

cluding Italy and Spain.

Both countries are now re-

cording fewer daily deaths

than they have in over a week,

and the pressure on hospitals

in Italy is beginning to ease,

officials said.

The pan-continental Stoxx

Europe 600 index gained 3.7%.

In Asia-Pacific markets. Aus-

tralia’s benchmark S&P/ASX

200 index closed up 4.3%.

Japan’s Nikkei 225 rose 4.2%.

Markets in mainland China

were closed for a holiday.

At midday Tuesday in To-

kyo, the Nikkei was up 1.3%

and Hong Kong’s Hang Seng

Index was up 0.6%. S&P 500

and Dow futures were flat.

The Securities and Ex-
change Commission suspended
trading in two stocks over po-
tentially inaccurate informa-
tion about their activities in
response to the new coronavi-
rus pandemic.
One of them, Arizona-based
No Borders Inc., had cited
support from members of Con-
gress in promoting plans for
new testing kits for Covid-19,
the disease caused by the cor-
onavirus.
Trading in shares of No Bor-
ders—whose other businesses
include selling dental sup-
plies—andSandy Steele Un-
limitedInc., a clothing maker,
was suspended effective Mon-
day morning after the SEC is-
sued suspension orders for the
two stocks on Friday.
Both are penny stocks that
aren’t listed on any stock ex-
change, and they trade in the
lightly regulated over-the-
counter market.
With No Borders, the SEC
said in its order that it had
“questions and concerns re-
garding the adequacy and ac-
curacy of publicly available in-
formation” on the company.
No Borders said in a March
16 news release that it was
launching a “Home Specimen
Collection Kit” that would al-
low people to submit samples
for coronavirus tests without
having to leave their homes.
On March 23, No Borders
said that it had engaged with
the offices of House Minority
Leader Kevin McCarthy (R.,
Calif.) and Rep. Paul Gosar (R.,
Ariz.) to advance its coronavi-
rus-testing plans. The same
day, Mr. Gosar said in a tweet
that he was “happy to work
with @NoBordersNBDR on ex-
pediting test kits to the US.”
Mr. Gosar’s office assisted
No Borders in clearing supplies
through customs, a spokesman
for the Arizona congressman
said. “We were happy to as-
sist,” he said. “As for actions
taken by the SEC, that is not
something our office would re-
view.”
Representatives of Mr.
McCarthy did not respond to a
request for comment.
“We are currently working
with the SEC to resolve their
concerns,” Joseph Snyder,
president and CEO of No Bor-
ders, said in an email. The
company stands by its news
releases, he added.
The SEC suspended trading
in Sandy Steele over concerns
about emails from unknown
stock promoters to investors
stating that the company “has
the ability to produce protec-
tive masks that are in high de-
mand due to the COVID-19 cri-
sis.”
The company didn’t respond
to a request for comment.

BYALEXANDEROSIPOVICH

SEC Halts

Trading in

Two Stocks

On Claims

AUCTION RESULTS
Here are the results of Monday's Treasury auctions.
All bids are awarded at a single price at the market-
clearing yield. Rates are determined by the difference
between that price and the face value.

13-Week 26-Week
Applications $157,123,412,500 $142,516,585,500
Accepted bids $58,893,788,700 $49,078,064,500
" noncomp $593,947,700 $437,630,500
" foreign noncomp $870,000,000 $745,000,000
Auction price (rate) 99.968403 99.919111
(0.125%) (0.160%)
0.127% 0.162%
Bids at clearing yield accepted 86.87% 10.38%
912796WW5 912796TN9
Both issues are dated April 9, 2020. The 13-week bills
mature on July 9, 2020; the 26-week bills mature on
Oct. 8, 2020.
THREE-YEAR NOTES
Applications $91,101,944,400
Accepted bids $40,131,675,300
" noncompetitively $27,690,200
" foreign noncompetitively $100,000,000
Auction price (rate) 99.707782
(0.348%)
Interest rate 0.250%
Bids at clearing yield accepted 71.46%
Cusip number 912828ZH6
The notes, dated April 15, 2020, mature on April 15,
2023.

Interrupted

Trading in No Borders stock
was suspended Monday
after the SEC raised concerns
about the accuracy of some of
its statements.

Source: FactSet

$0.05

0

0.01

0.02

0.03

0.04

Jan. Feb. March April

Company says it is

launching test kits

relationship between the price

of different assets—has broken

down, suggesting the market

is still under stress, according

to Dwyfor Evans, head of

macro-strategy for the Asia-

Pacific region at State Street

Global Markets in Hong Kong.

“We have good days and

bad days. Sometimes they fol-

low each other,” Mr. Evans

said.

The yield on 10-year Trea-

surys rose to 0.675% from

0.587% Friday. The market for

U.S. government debt, nor-

mally the most liquid and ac-

tively traded bond market in

the world, has calmed in re-

cent weeks following a string

of extraordinary measures by

the Federal Reserve. Yields

rise when bond prices drop.

Oil markets struggled to

find their footing. Major oil-

producing nations are prepar-

ing to meet Thursday to dis-

cuss how to address the global

glut in supply.

West Texas Intermediate

crude, the U.S. oil benchmark,

fell 8% to $26.08 a barrel.

An emergency summit to

discuss global production cuts

was pushed back from Monday

to later in the week amid con-

tinued tensions between Saudi

Arabia and Russia.

Investors are growing more

concerned that a failure to cut

output may result in the world

running out of storage space

for excess crude.

Limiting production may

also not be enough to offset

the drop in demand.

“Even if they sort out

something on the supply side,

it probably won’t be big

enough to offset what’s hap-

As for the market, “I tend

to not believe a bottom’s been

hit,” he said, “because we

don’t know what the end point

of the economy is.”

At least one-quarter of the

U.S. economy has gone idle as

authorities curtailed travel

and activity, an analysis con-

ducted for The Wall Street

Journal showed.

JPMorgan Chase Chief Ex-

ecutive James Dimon said in

his annual letter that he ex-

pects “a bad recession.”

The country wasn’t pre-

pared for a pandemic, but “we

can and should be more pre-

pared for what comes next.”

The pandemic has brought

some businesses to a stand-

still. Airlines, for example, are

cutting flight schedules, put-

ting expansion plans on hold

and looking for places to park

their idle planes.

Most recently, they have

significantly cut travel to New

York as the crisis there wors-

ens.United Airlines, for one,

cut 90% of its flights to New

York. Its shares rallied Mon-

day. United climbed 5%, while

American Airlinesrose 1.2%.

Some investors remain cau-

tious about the prospects of a

sustained market rally. Volatil-

ity remains high and cross-as-

set correlations—the typical

Continued from page B1

Dow Rises,

Led by

Tech Stocks

There were indications Monday that social-distancing measures are having an impact.

JIM WATSON/AGENCE FRANCE-PRESSE/GETTY IMAGES

to attack U.S. producers by

flooding oil markets to which

Riyadh has responded that

Moscow was first to break a

pact to curb output.

Now the Saudis and others

in the cartel are spreading a

unifying message, according to

OPEC delegates: Without a

consensus on cuts, there will

be few places to store all of

the world’s unused oil.

“If there is no deal, we will

have some nice number of

floating tankers going no-

where,” an official in the king-

dom said.

Moscow appears to share

that view. All oil-storage facili-

ties in the world could be

filled, Kremlin spokesman

Continued from page B1

Dmitry Peskov said Friday,

blaming the situation on the

Saudis. “Tankers are already

used not for shipping oil but

as floating canisters,” he said.

As the coronavirus out-

break moved across the world

and led to travel restrictions

and work stoppages, oil con-

sumption dropped sharply.

China, where the pandemic

started, was first to fill up its

storage tanks. After Indian

ports declared force majeure

in response to coronavirus-re-

lated restrictions, 2.7 million

barrels of crude flowed into

the country’s inventories dur-

ing the week ended March 29,

according to Paris-based con-

sulting firm Kayrros, which

tracks global storage by using

satellite imaging.

The expected shortage of

space to store unsold oil has

prompted oil traders to scour

the globe for available space.

In recent days, European trad-

ers have expressed interest in

renting space to store Middle

Eastern oil at a refinery in

Morocco. The plant, located on

Morocco’s Atlantic coastline,

has been shut for five years

after going out of business

during an oil-price crash in

2014. Now the facility has a
      prized asset: enough space to
      hold about 10 million barrels
      of oil.
      An official at the refinery
      declined to comment.
      Traders are also flocking to
      the Caribbean in search of
      space. Two storage sites once
      deserted by Venezuela’s state-
      oil company are now brim-
      ming with crude again. De-
      mand for oil storage in the
      island nation of St. Lucia
      dropped in early 2019 after
      Venezuela came under U.S.
      sanctions but crude stocks
      there now sit at 5.2 million
      barrels, more than double
      storage levels a year ago, ac-
      cording to Kayrros.
      Tanks on the tiny Dutch-Ca-
      ribbean island of Curaçao were
      filled with an additional
      381,000 barrels of crude dur-
      ing the week of April 2, says
      satellite-data consulting firm
      Ursa Space Systems.

“Storage was a logistical

tool. Now, it has become a

prized commodity,” said Dan-

iel Yergin, vice chairman of re-

search and information firm

IHS Markit and author of “The

Prize,” a history of the oil in-

dustry.

The storage glut is also

moving out to sea. One Euro-

pean oil trader said he has

been forced to store 3 million

barrels of Middle Eastern oil

off the coast of Venice after

northern Italy was put on a

lockdown due to the outbreak.

Further south, a constella-

tion of at least 23 idling tank-

ers is crowding Hurd’s Bank,

an offshore area near Malta,

which is often used by traf-

fickers of illicit Libyan or Ven-

ezuelan oil, satellite-tracking

images of website FleetMon

show. Some ships are loaded

product vessels that arrived

from Italy in recent days.

Throughout the region, ship-

pers have spotted an opportu-

nity: They are looking for anti-

quated tankers, bound for

salvage yards, to store the oil,

according to a veteran Euro-

pean oil trader.

The Saudis haven't been

spared from the impact of the

global surplus. As of April 2,

nearly 750,000 barrels a day

of its loadings were on the wa-

ter with nowhere to go, ac-

cording to Kayrros. But while

Saudi Arabia normally gets its

clout in oil markets from its

capacity to pump more oil, it

now has the upper hand on

competitors from its access to

storage, oil experts say.

Last month, the kingdom

booked available space at the

Sumed pipeline in Egypt,

which is normally used to

transit oil. The amount of oil

stored there is now three

times bigger than early 2019

and, as of March 29, was 70%

full, according to the data

company. And at home, the

kingdom owns storage for 18

days of its production, accord-

ing to IHS Markit. That means

it can deal with unsold oil lon-

ger than Russia, which has

space for only eight days of

output.

Storage

Presses

Producers

Oil traders are scrambling for empty vaults in remote corners of the oilworld like Morocco, Malta and the Caribbean. A Moroccan oil refinery.

AGENCE FRANCE-PRESSE/GETTY IMAGES

traded barbs.

The Group of 20 major

economies are also consider-

ing holding an emergency en-

ergy summit on Friday, and

OPEC may make any supply

Measures to contain the

coronavirus pandemic have

pummeled fuel demand, while

a spat between Saudi Arabia

and Russia over their share of

global energy markets has

deepened the oil glut.

Prices have fallen so much

that many producers can’t

cover their costs. And the

world could soon run out of

storage for its excess oil, add-

ing to the sense of urgency for

many nations and companies

to begin lowering supply.

Some investors were hop-

ing U.S. companies would out-

line some measures after a

meeting between Mr. Trump

and energy-industry execu-

tives on Friday. But no such

signals were announced, and a

Monday summit between the

Organization of the Petroleum

Exporting Countries and its

allies including Russia was

pushed back to Thursday after

Saudi Arabia and Russia

cuts contingent on participa-

tion from other countries.

A deal between OPEC and

allies to cut output fell apart

last month, helping contribute

to the downward spiral in the

energy sector.

Some traders expect oil to

remain extremely volatile un-

til there is more clarity on

supply cuts. Prices fell

roughly 10% when futures

trading opened on Sunday

evening but pared some of

that drop after Kiril Dmitriev,

chief executive of the Russian

Direct Investment Fund, told

CNBC the parties are “very,

very close” to a deal and that

“Russia is committed” follow-

ing recent comments from

Russian President Vladimir

Putin.

At the same time, signs

that transportation activity

could be limited for months

have convinced some analysts

that supply cuts alone won’t

be enough to drive a long-

term price rebound.

“Extreme virus contain-

ment efforts have decimated

transportation fuel demand,”

Bank of America analysts said

in a note.

Monday’s market moves

came with stocks around the

world rallying following some

early signs that lockdowns in

the U.S. and Europe may be

helping slow the spread of the

coronavirus.

Elsewhere in commodities

Monday, front-month gold fu-

tures rose 2.7% to $1,677 a

troy ounce, hitting a fresh

seven-year high. Physical

shortages due to shutdowns of

mines, refineries and trans-

portation have helped support

gold prices, as have steady

safe-haven buying and many

interest-rate cuts around the

world. Lower rates make gold

more attractive to yield-seek-

ing investors.

Oil prices fell Monday, par-

ing some of their recent re-

bound after a virtual summit

for producers to discuss sup-

ply cuts was postponed to

later in the week.

U.S. crude futures dropped

8% to $26.08 a barrel on the

New York Mercantile Ex-

change, coming off their larg-

est one-week percentage ad-

vance ever.

After tum-

bling to an

18-year low, prices soared late

last week after President

Trump said that Russia and

Saudi Arabia were close to

reaching a deal to curb supply.

Even with that rebound, they

are down about 57% for the

year.

On Monday, Brent crude,

the global gauge of oil prices,

slid 3.1% to $33.05 a barrel on

the Intercontinental Exchange.

BYAMRITHRAMKUMAR

Oil Dives as OPEC Talks Are Delayed

COMMODITIES

Crude-oil futures

Source: Dow Jones Market Data

$70

0

10

20

30

40

50

60

a barrel

Jan. Feb. March April

Brent

WTI

10

–12

–10

–8

–6

–4

–2

0

2

4

6

8

%

Jan. 2020 Feb. March April

Source: FactSet

00

12th consecutive move

of 1% or more in either

direction,the longest such

streak since March 2009

28th consecutive move

of 0.5% or more in either

direction,the longest

such streak since

September-October 1931

One-day performance of the

Dow Jones Industrial Average