April 16, 2020

Markets Optimistic About New Lockdown Measures

Markets Optimistic About New Lockdown Measures

Over in Europe, investors are shrugging off the pessimism and willing to focus on more positive things. Germany has drawn a plan to ease off the lockdown restrictions and traders are optimistic about this development.

Having said this, European markets aren’t trading higher with bigger margins, we are only seeing some small gains, and it is likely that as the trading resumes, these small gains may disappear because of the selling pressure on the energy sector.

The US markets were under the influence of earnings season yesterday, and that drove the markets lower. Inferior oil prices didn’t help market sentiment.  However, investors are looking beyond this, and they are hoping for a better future given the fact that major countries such as China have already hit their peak in the Coronavirus crisis. Also, there were no signs of major chaos after the lockdown restrictions eased off in countries such as Austria and Denmark.

Over in the U.K., it is expected that the lockdown will be extended today. The pressure is increasing on the government with respect to its exit strategy out of the lockdown. The reality is that the UK’s chief scientist isn’t sure if the UK has reached its Coronavirus peak, and there is still a steady rise in the death toll: 12K people have become victims of this virus.

On the other hand, Donald Trump, the US president, continues to believe that the US has seen its peak and he is expected to announce the guidelines to relax the lockdown measures today. The risk of opening the economy without any appropriate measures in place, or before the country has seen its peak, is far greater. The reason being that it increases the odds of another lockdown if the situation worsens, and the economic impact of that would be far greater as compared to the economic benefits of opening the economy now.

Nonetheless, we are expecting the market participants to react positively when Donald Trump announces the measures and the equity markets could see some new capital.

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