It would seem that this week has been something of a wake-up call for the markets, the gradual optimism that had been building thanks to lockdown easing in more and more countries erased by the threat of a second wave of cases, repeated warning of a prolonged recession and freshly brewing tensions between the US and China.
Europe took its cue from Wednesday evening’s stateside trading. By the end of the session the Dow Jones was down more than 500 points – that’s a near 1000 point decline in the space of 2 days, forcing the index back below 23250.
A major blow came from Fed chair Jerome Powell, who appeared to take negative interest rates off the table, instead urging further fiscal stimulus – something that may be hard to come by given the fractious state of US politics at the moment.
Donald Trump then failed to help matters by stoking the fires of the trade war, tweeting that dealing with the USA’s rival superpower is ‘a very expensive thing to do’, while going on to mention how ‘100 Trade Deals’ wouldn’t make up for the losses caused by the ‘Plague from China’.
The situation between the two nations is in danger of spiralling out of control – Trump’s comments came after a report in the Global Times stating Beijing is ‘extremely dissatisfied’ with America’s ‘abuse of litigation’ against China over the covid-19 epidemic, and that the country is ‘mulling punitive countermeasures against US officials, entities and state officials’.
An unpleasant breakfast for European trades, one that explains why the region’s indices immediately continued yesterday’s losses. The FTSE – which had crossed 6000 on Tuesday – fell 1.3% to a one week low of 5830, while the DAX was down 0.8% and the CAC 0.9%.
Currently the Dow Jones is looking to claw back a handful of points this afternoon, though there is a long way to go between then and now, with the weekly jobless claims reading at least one obstacle the index needs to clear.
"Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved."