Markets Optimistic About New Lockdown Measures

Markets Optimistic About New Lockdown Measures

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

Havingsaid this, European markets aren’t trading higher with bigger margins, we areonly 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 energysector.

TheUS markets were under the influence of earnings season yesterday, and thatdrove the markets lower. Inferior oil prices didn’t help marketsentiment.  However, investors are looking beyond this, and they arehoping for a better future given the fact that major countries such as Chinahave already hit their peak in the Coronavirus crisis. Also, there were nosigns of major chaos after the lockdown restrictions eased off in countriessuch as Austria and Denmark.

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

Onthe other hand, Donald Trump, the US president, continues to believe that theUS has seen its peak and he is expected to announce the guidelines to relax thelockdown measures today. The risk of opening the economy without anyappropriate measures in place, or before the country has seen its peak, is fargreater. The reason being that it increases the odds of another lockdown if thesituation worsens, and the economic impact of that would be far greater ascompared 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 somenew capital.