Pre-Market Review
No Coronavirus Vaccine Yet
Markets in Asia followed on from markets on Wall Street and lost ground. This was amid doubts about progress in the development of a Coronavirus vaccine to tackle the COVID-19 outbreak. Stocks on Wall Street turned negative towards the end of Thursday’s session. All happened after a report showed a potential vaccine had failed to help Coronavirus patients.
The markets’ sensitivity to any news about a Coronavirus cure reflects the growing unease about the lockdown. Also, the realisation that lockdown and primarily social distancing measures will need to be in place for in not all then most of 2020 keeps uncertainty floating. It could be that anything pointing to the virus staying with us for longer to potentially impact the stock markets.
Business activity took a hit and shows no signs of picking up as lockdown continues to hit each economy. Data out of Europe and the US yesterday showed that production, supply chains, and spending are under serious pressure.
US to pump more financial aid into the economy
The news comes as the US House of Representatives passed another $480 billion in stimulus for the US economy. This takes the overall aid packages introduced by the US government to well over $3trillion. This comes on the same day that European Central Bank President Christine Lagarde launched a scathing attack on EU leaders. The ECB President said that leaders had done “too little too late’ in agreeing on aid for the Eurozone economy. She also warned that the lack of action could well now see GDP in the Eurozone fall by 15%.
It comes after the EU agreed on a €2 trillion financial fund. However, its release is delayed until the summer.
There is no doubt that the Euro and the European Union are fighting for survival. The Euro bloc has shown itself inadequate in dealing with a crisis. The Eurozone failed to recover properly from any of the three major crisis it has already faced in its short life. With anti-European sentiment growing throughout Europe, there could be some challenging times and tough questions asked in the coming months.
Yesterday’s initial jobless claims showed that more than 4 million more Americans have claimed unemployment benefits in the last week. In total, more than 26 million have now lost their jobs in the previous 5 weeks. There are aspects of the economy that will suffer, but unemployment is vital for economic recovery. The numbers worsen with every week, and with every week the financial hole grows deeper.
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