Echoing Tuesday’s trajectory, Europe’s early rebound proved to be unsustainable, especially in the face of a sharp reversal from the US.
In theory there was plenty for investors to cling onto this Wednesday. The European session started with a 0.5% interest rate cut from the Bank of England, taking them back to a record low of 0.25%. That was followed a few hours later by a coronavirus-focused budget from new Chancellor Rishi Sunak, one that saw the UK government announce a stimulus package worth £30 billion.
Yet once again investors caught a case of the fear. A sharp jump in the number of cases in the UK, from 373 to 456, didn’t help. Neither did the warning from director of the National Institute of Allergy and Infectious Diseases Anthony Fauci that any vaccine will be 18 months away.
Perhaps most damning in the eyes of the markets, Donald Trump is yet to deliver his emergency relief plan, and has failed to give any kind of timeline for its implementation if it gets through Congress.
This lack of movement, when other nations have started to take more drastic steps, contributed to a 1000 point-plus plunge from the Dow Jones, the index wiping out most of the rebound seen late on Tuesday.
The DAX and CAC quickly erased their own growth, though capped their losses at 0.5% and 0.3% respectively. The FTSE, on the other hand, dropped 1.4%, tumbling back below 5900 despite the various stimulus measures revealed in the UK this Wednesday.
Next up on Thursday is the ECB, Christine Lagarde and co. facing the first scheduled central bank meeting since the coronavirus took hold. The ECB finds itself in an unenviable position, caught between an outbreak rock and a negative interest rates hard place. And even if it does cut rates, investors have proven to be tough to please when it comes to stimulus announcements.
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