The terms of a possible extension or partial lifting of the quarantine in various European countries were discussed in detail yesterday. Discussions of similar prospects for the United States today are on the front pages of the world media.
The reason for such close attention can be credited to two events that followed one another over the past 24 hours, and the fact that they are connected to some extent cannot be excluded.
Yesterday, the markets welcomed the data that came from China regarding the trade balance. The main stock exchanges ended up appreciating a little bit all over the world as a result.
The American equity markets appreciated substantially, where the Dow Jones index grew by 2.29%, the S&P 500 index appreciated by 3.06% and the Nasdaq index also saw a rise of 3.95%. The Stoxx 600 - European benchmark index - gained 0.64%.
In the debt market, yields fluctuated considerably throughout the day, and it was not possible to observe a clear trajectory.
The International Monetary fund (IMF) forecasted that the global economy would decline sharply by three % in 2020. The decline is much steeper than in 2009, which was a time of Global financial crisis when it fell by 2.3%. If this forecast is correct, the economy may have a hard landing, the hardest since World War II.
It may be worth remembering that the IMF forecasted a growth of 3.3% of the world's GDP in January 2020 when the coronavirus already broke out in mainland China.
Recent cataclysms drastically differ from the standard cyclical crisis, even the one suffered in 2008-2009.
Yesterday it was possible to observe some aversion to the risk to be present in the markets. Expectations regarding the poor results that may arise in this earnings season, ended up translating into a drop in the main world stock indexes.
In particular, the S & P 500 and the Dow Jones fell while the technological Nasdaq ended up being the exception with just a value r. In Europe, markets were closed and therefore volatility was reduced.
In the debt market, US yields ended up falling, revealing normal behavior in a day of risk aversion.
Stock indexes on different continents have so far continued to behave in a moderately positive mood. The US broad market S&P500 index, after a small pullback lower on Monday, is again hitting the ceiling near last week's highs. The American Nasdaq index of the global high-tech sector has been able to climb more than 100 points above the peak resistance near the 8350 area it had almost reached before Easter.
However, this happened mainly due to the rise in share prices of several leading companies whose activity is concentrated in online service segments.
On Thursday the markets were marked by a set of news that influenced the day. The news concerned the bad labor market which came from the United States, as well as the Eurogroup and OPEC + meetings, which brought about mixed feelings to the market. In the end, another program of purchase of assets and bonds by the North American Fed prevailed. On Friday the stock markets were closed in Europe and the United Sates and there was not much volatility in the markets.
The last thing I'd like to do is to give too early hopes to the people who are still sitting at home. But an unbiased assessment of current statistics, rather than any future projections, for some European countries suggests that the dynamics of infection is fading.
Better to knock on wood twice before saying this, but let's look at Germany or Italy regarding new cases of the coronavirus with a simple "technical analysis". Italy was initially the largest viral hotbed until it was overtaken by Spain in the total number of cases.
The Eurogroup, which is represented by the finance ministers of the EU countries, has agreed on a €540 billion bailout package of measures to combat the economic fallout of the global pandemic. The negotiations were difficult and protracted so this final accord has drawn a round of applause from the participating officials. In reality, it's difficult to determine whether this was a victory for Europe as a whole or whether the point of view of some individual countries with a stronger political weight prevailed.
Much has been said about whether closing the economy as a consequence of the measures taken in order to achieve social restraint is the right way to go. The inevitable recession and even the possible deaths that could arise from it, end up being some of the arguments of the people who tend to favor another more flexible form of containment.
The reality is that the presence of these measures, which we see being implemented all over the world, promotes an abrupt and painful recession for everyone.
The second half of the short Easter week in Europe is marked by heated discussions between the region's finance ministers and other EU officials. Therefore, despite the more positive pandemic background in European countries compared to the United States, most of the European markets and the pan-European Stoxx 600 index are less inclined to extend the previous gains made so far in comparison to the American stock indexes, such as, the S&P500 and Nasdaq.