European and US futures are trading sharply lower as traders are worried about the global economy’s weakness, which has been triggered by the second coronavirus wave, and particularly, the mutation of Covid-19. There is no doubt that the new strain of coronavirus is spreading much faster than the previous one. But thankfully, scientists currently believe that the current coronavirus vaccine is likely to work against a new variant.
The Dow Jones Industrial Average’s futures are trading lower by over 200 points because traders know that the US labour market has taken a turn. For instance, the US NFP data released on Friday confirmed that the weekly jobless claims’ weakness has started to translate into the monthly US NFP data. On Friday, the US NFP printed a reading of -140K against a forecast of 60K. This means that the US economy lost jobs, and the churn rate among employers has started to shoot higher. No one can blame businesses for this as they are forced to take these tough measures because of rising COVID-19 cases.
In the UK, the coronavirus situation is the worst among other Western European countries. This is because the UK has lost more people than any other country in Europe to this virus. Simply put, there is a serious shortage of emergency beds, and it is incredibly difficult to get a bed even if you have a non-related accident. Clearly, the public isn’t aware of this critical situation; otherwise, they would be taking more precautions. Nonetheless, the FTSE 100 index had an incredible run on Friday, but today the futures are trading lower.
The current retracement that we see in the stock futures, especially in the US stock market, may not last for long, and this is because investors are still very much optimistic about more stimulus aid coming out of the US. The fact that all the election drama is all but over, and the new administration is very much determined to restore economic growth; traders may soon begin to bag some bargains. President-elect Joe Biden pledged a hefty stimulus aid package during his speech on Friday. He has once again assured Americans that the new stimulus aid package would be numbered in trillions, rather than billions. Clearly, Biden has some serious ambitions, and investors are hopeful about his view of the economy.
Overall, there are chances that we may see some more political turmoil in the US after the extreme violence on Capitol Hill. Lawmakers have started the process to impeach President Trump, but the fact is that there is not enough time left for this process to see the light of day. The impeachment proceedings are likely to shape up in the House of Representatives, and this means more volatility for the US stock market. These small bumps may not be able to distract investors too much as their focus is beyond these events.
In terms of crypto, a healthy correction is taking place; it was due a long time ago. Bitcoin prices are likely to find their support between $28K to $30K. This is not the time to panic but to look at this opportunity through a more optimistic lens as the bull run is not over yet, and it is still likely to make its journey to the upside.