GENEVA — Global risk appetite deteriorates as ugly economic data added to weak bank earnings confirm that a sizable recession is knocking on the door. US banks are increasing their bad-loan provisions to record levels on fear that credit-card holders and businesses may not pay back their interests and loans. Still, trading revenues for Goldman Sachs, Bank of America and Citi beat estimates as hectic first quarter trading and high market volatility helped boosting activity. Moving forward, there is a growing chance that near zero interest rates will severely hit banks’ profit margins. Therefore, bank stocks traded south in New York, along with the energy sector. On the data front, retail sales in the US tumbled by a record 8.7% m-o-m in March; the industrial production contracted 5.4% during the same month. And more disquietingly, Empire State Manufacturing index that printed a historical slump of 78.2 (versus -35.2 expected by analysts and -21.5 a month earlier) hinted that the worst is yet to come as activity across the United States fell to an anemic level following the general lockdown to contain the virus contagion. The Philly Fed manufacturing index will likely reveal a similar result later in the session. And even with the strict measures taken to stop the virus from spreading, there are more than 2 million infections across the world. Hence, equities are offered on the back a powerful mix of bad corporate and economic news, and strong headwinds could further hit the market following a near 50% recovery in stock prices over the past weeks. Now it is too early to tell whether we are at the peak of another roller coaster ride, but the chances are that we see a renewed bearish wave. There is a stronger case building for a W-shape correction. Investor appetite may not return to ideal levels before the much-dreaded earnings season. In Europe, the energy heavy FTSE fell 3% on Wednesday, dragged down by a hefty unwind in energy and banking stocks, as well. Activity in FTSE futures (-0.12%) hint at a bearish start to Thursday’s session; mining and energy stocks will likely remain on the chopping board as the global mood worsens. WTI crude slipped below the $20 a barrel for the first time in a move that has been more sustainable than we have seen previously, after the IEA said that the global oil demand will slump 9% this year, meanwhile the oil storage will be full by mid-2020. It again comes back to the simple equation of too much offer versus a tumbling demand. But the market always adjusts itself. With oil prices this low, many oil producer nations will need to back off for a while, given that pumping oil below $20 a barrel is economically unviable for most of them. Therefore, looking for dip-buying opportunities is the main play in oil. For energy stocks however, the downside risks persist. Else, gold didn’t shine as a result of equity sell-off, rewarding only those who piled into the precious metal in a preventive action before the equity sell-off hit the market place. The ounce traded below the $1,750 mark, but support is building near the $1,700 with fading appetite for risk. In foreign exchange, the US dollar gained field, supported by increased capital flows to safety. The US 10-year yield slipped below 0.65%. Due today, the unemployment claims in the US is expected to print another unpleasant week, with the consensus of analyst expectations pointing at above 5 million extra claims. But we do not rule out the possibility of an uglier figure on the back of increasing job losses due to the prolonged halt in US economic activity. Bad data could, however, back inflows to the greenback, with investors tempted to return to cash ahead of a potentially renewed market turmoil in the coming weeks. The EURUSD retreated to 1.0865, as Cable slipped below the 1.25 mark. Further downside correction is expected in both markets. The USDCAD, on the other hand, cleared the 1.40-resistance in a swift move, as the Bank of Canada (BoC) maintained the interest rate unchanged at 0.25% as expected. Depressed oil prices should continue weighing on Loonie. — The writer is senior analyst at Swissquote Bank