Covid-19 infected global markets. Europe has caught its breath and awaits the statements of French President Macron and German Chancellor Merkel within a few hours. While it is stated that both leaders are in the process of consulting with local administrations, it is considered certain that the two giants of Europe will return to partial curfews or quarantines.
While we celebrate the Republic Day of all our readers and our nation, we are grateful that our markets are a holiday on such a day. At 19:30, Covid-19 was infected all over the world stock markets. While the dominant stock index in Europe, the Stoxx600 collapsed 3.45%, on Wall Street the fear indicator VIX jumped above 40, shouting “bear market”. All US stock indices lose around 2.5%. In addition to the Russian ruble and Emerging Markets Turkey’s worst hit by Covid-19 currencies of Central and Eastern European countries also eats stick.
The disease has also infected the oil market. Brent crude declined by 5%, while the concern that Covid-19 will reduce energy demand by closing people home and swelling crude oil stocks in the USA are priced.
Investors predicted the second wave of Covid-19 but laughed past. Because they could not accept that the states would once again lock the people home. Instead, unrealistic vaccine news was bought.
On this day, the State of Illinois in the USA has banned restaurants from serving inside Chicago. CNBC’s flash name Jim Cramer said, “We will see what happened in Chicago in other cities. “The quarantines plus the second Financial Support Package is too old, equals the scene you see in the markets today,” he said.
UBS Asset Management Company Investment Committee Chairman Mark Haefele gave up hope from 2020. “We expect volatility to remain high during the remainder of the year due to the US elections and Covid uncertainty,” he told CNBC. “But the probability of a premium is still high in the medium term”.
Europe has caught its breath and awaits the statements of French President Macron and German Chancellor Merkel within a few hours. While it is stated that both leaders are in consultation with local administrations, it is considered certain that the two giants of Europe will return to partial curfews or quarantines.
Vanguard Asset Management Family investment strategist Alexis Gray told the Financial Times that the measures taken to prevent the spread of the corona were already seen to be insufficient. “There will be new shutdowns, which will batter the EU economy. “We encountered an unprecedented dose of uncertainty, the markets are still trying to price it.”
Currently, the Emerging Markets MSCI Stock Index is losing 1.17%, while Latin American stock markets are losing more than 3.5%. All currencies are straining against the safe haven dollar.
JP Morgan claimed that if Trump wins the US election, a relief rally would begin. In our opinion, if the US elections make a definite result on the night of November 3, the markets will relax a little. It will be more important for the loser to accept the outcome than who wins.
In Europe, compared to the USA, the negative effects of the corona on the economy are very evident. The Stoxx600, which has seen the 5-month bottom today, can go even further if Germany, France and Britain, as well as other EU countries, decide on curfews.
It can be expected that the Asian stock markets, which controlled the epidemic with a few exceptions, will be more resistant in this difficult period. Domestic demand and home shopping companies will stand out more than exporters on Asian stock exchanges.
The appearance in oil is very cloudy. If OPEC plus Russia does not impose additional production restrictions, the market could collapse. In this case, it is also possible that global deflation and money will start to flee from Developing Countries.
It is difficult to make a “bear market” prophecy at a time when the Fed, ECB and BoJ print endless money and insure investors against losses. However, risk aversion is the most likely scenario to continue until the end of the US presidential election at the earliest.