Forex Analysis & Reviews: 25.06.2020 - Stock market crisis matures:...

25.06.2020 03:15 PM

Stock market crisis matures: Europe, Asia, and America are declining

This morning, stock markets in the Asia-Pacific region declined due to the outbreaks of coronavirus infection, which continue to be recorded in the United States, China, and Latin America. Statistics on the number of newly infected cases are extremely disappointing. This makes investors think that a quick economic recovery is definitely not worth the wait.

According to the World Health Organization, the number of new cases in the world has increased to 30% more in the last week alone. In some US states, authorities have begun to think about restoring restrictive quarantine measures that will help slow down the growth of infections, if not stop it.

All this makes market participants suggest that the level of business activity will begin to decline again. This, of course, is an extremely disappointing fact, given the growing economic recovery.

Another not-so-good news was the possible imposition of duties by the United States of America with respect to goods shipped from France, Germany, the United Kingdom, and Spain. The total value of the premiums can reach $ 3.1 billion. Some particularly categorical investors claim that this is the first stage of a trade war, which has just begun to unfold between the regions.

Risks regarding the second wave of the pandemic and the possible introduction of duties seriously disturbed stock market participants, who hastened to reduce their positions, which was immediately reflected in the overall negative dynamics: risky assets were rapidly losing their popularity.

Japan's Nikkei 225 index fell 1.2% this morning.

The South Korean Kospi Index fell by 0.9%.

Australia's S & P / ASX 200 Index fell more than the rest by 2.2%.

Today is a holiday in China, so exchanges do not work.

European stock markets are also experiencing their worst times. They are crushed by news about the increase in the number of coronavirus cases in the world and the possibility of a second wave of the pandemic, as well as news about future duties from America.

According to the latest data, the IMF corrected the economic decline for the current year, reducing the already gloomy figures. So, the drop may not be 3%, as previously assumed, but all 4.9%. This means that the COVID-19 pandemic has led to even more negative consequences than expected. And a new wave may even become a disaster. The pace of recovery is likely to be slow. At least next year, growth may not occur by 5.8%, but only by 5.4%.

Yesterday, the European Commission came up with a proposal for a new regional budget for the next fiscal year. According to adjusted data, it should amount to 166.7 billion euros, which will not be the final figure, since it will be supplemented by grants in the amount of 211 billion euros and loans in the amount of 133 billion euros.

The general index of EU enterprises Stoxx Europe 600 fell 2.78% and was at the level of 357.17 points.

The UK FTSE 100 index fell 3.11%. The German DAX Index by 3.43% and the France index by 2.92%. The indices of Italy and Spain are also in the negative at 3.42% and 3.27%, respectively.

The stock market of the United States of America was negatively affected and declined. The main reasons for this were the ever-increasing possibility of a second wave of pandemic and the return of restrictive quarantine measures. So, the number of new patients in Florida on the second working day of the week jumped to a record number of 5,508 thousand people. Other states have begun to return a mandatory two-week quarantine for all arrivals, and it seems that these are not all restrictions that will have to be returned to in order to avoid serious consequences. Of course, this slows down the recovery of an already weak economy even more.

In addition, the Head of the Federal Reserve of Chicago made a statement that in order to ensure sustainable economic growth, new stimulating monetary measures may be useful, especially considering the extremely low inflation in the state.

Some positive was noted against the backdrop of news that trade relations between the US and China would not be broken, and the first stage of the transaction should be completed in full.

The Dow Jones Industrial Average yesterday dropped by 719.16 points or 2.72%, at the close of the trading floor, and was at 25,445.94 points.

The Standard & Poor's 500 Index fell 80.96 points or 2.59%, to a stop at 3,050.33 points.

The Nasdaq Composite index fell by 2.19% or 222.2 points, which sent it to the area of 9 909.17 points.

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