Market Overview

Decisions and narratives of the European Central Bank (ECB) and the Bank of England (BoE) after regular meetings were very predictable and resembled routine procedures, which are implemented in current emergency situations. The lack of really fresh economic or financial incentives squeezes the market community to closely watch re-emerging infection spikes in some US states. 

The red flags are Texas and Florida test results. The local peak of 2,625 new infections detected on June 13 in Florida was followed by two days of a lull with below 2,000 figures, but the last statistics posted a new record of an average of almost 2,700 cases per day. In Texas, 4,413 new cases of infected citizens and asymptomatic carriers were identified on Tuesday and 3,511 cases more on Wednesday as the peak values in May barely exceeded 2,000 cases and the average for the first half of June was only approached 1,500 infected. The spike in California of COVID-19 new cases to 4,179 on June 17 is also worrying as the average number of cases in June is about 35% higher than it was in May.

At the same time, the number of daily cases in New York City fell below 600 for the first time in three months, when the number of tests were increased  at the end of April. This leads to a conclusion that testing really matters when it comes to the growing number of cases identified, but this number may then tend to fade after a significant percentage of the population has been tested. Perhaps this is one of the reasons why the markets are still making only moderate corrective movements in anticipation of new drivers, declining slightly at the moment, but maintaining a medium-term positive mood.

Over the past week, the words of an important representative of the World Health Organisation (WHO), Dr. Maria Van Kerkhove, a head of the WHO’s emerging diseases and zoonosis unit, also made a lot of noise and eased some second wave of the virus fears. “From the data we have, it still seems to be rare that an asymptomatic person actually transmits onward to a secondary individual,” she remarked by answering a question at a news briefing from the United Nations agency’s Geneva headquarters. “It’s very rare,” she added. "Asymptomatic transmission is particularly worrisome for public health officials, leading many to institute severe lockdowns and policies requiring masks in public. That’s because those patients never develop symptoms and, in many cases, don’t even know they are infected," CNBC explains. 

Naturally, such arguments raise questions about the justification of broad quarantine measures for all citizens without exception in different countries, after Dr. Maria Van Kerkhove said that "government responses should focus on detecting and isolating infected people with symptoms". So, other WHO officials quickly took greater care with their comments  after  receiving criticism from epidemiologists. Dr. Maria also tried to nullify the potential scandal by saying later that an asymptomatic spread is a “really complex question” and much is still unknown. “We don’t actually have that answer yet,” she said. “I was responding to a question at the press conference. I wasn’t stating a policy of WHO or anything like that. I was just trying to articulate what we know,” she said during a live Q&A streamed across multiple social media platforms. “And in that, I used the phrase ‘very rare,’ and I think that that’s misunderstanding to state that asymptomatic transmission globally is very rare. I was referring to a small subset of studies.”

The WHO also called the British investigations on the COVID-19 treatment a "scientific breakthrough" yesterday. The organisation noted, this is the first treatment, the results of which show a reduction in mortality by a third among hospitalised heavy patients. They officially congratulated the UK government, the University of Oxford, as well as numerous British hospitals and patients who have contributed to this "life-saving scientific breakthrough."

Whatever the case maybe with medical issues now or in the future,  market investors are now mostly convinced that new lockdowns of the economy is no longer worth waiting for either in Europe, or especially in the United States, where the point of view of the Treasury's Secretary Steve Mnuchin clearly prevails among the current federal authorities. Recently Steve Mnuchin vowed that the United States can't shut down the economy once again even if the virus resurges. And, as past experience shows, severe restrictive measures mostly affect corporate profits, although it is natural that the very spread of the virus makes consumers behave more cautiously to a certain extent also.

All of the above positive informative feedback, as well as the readiness of the central banks to keep or even extend large-scale business-supporting programs, may reduce the likelihood of too high volatility on stock exchanges before the end of the week and diminish the possible size of technical corrections for major stock indexes and shares in the US and Europe. Until some significant news drivers come to the markets, the demand for additional purchases of the US Dollar or US Treasury's bonds as safe-haven assets may be limited, while most of the currency pairs on Forex are unlikely to go far beyond the ranges of the previous couple of days.

Disclaimer:

Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.