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Analysis News:::2020-07-15

Asia, US, and EU stocks rise


The Asia-Pacific stock exchanges rose at the beginning of trading on Wednesday. This was, however, interrupted by some negativity with China's stock market which declined after market participants feared a further escalation of the conflict between the US and China.

US President Donald Trump released a statement that he would not resume negotiations with Chinese colleagues on the next phase of the trade agreement. He added that at the moment he has no interest in these negotiations, and so far nothing is known about further plans.

Moreover, Trump announced the release of the bill, which includes, inter alia, sanctions against certain Chinese officials who are involved in the ratification of the law restricting the freedom of Hong Kong. Trump believes that they should be punished for harassment that began in Hong Kong. In addition to the law, he also signed a decree terminating Hong Kong's special privilege position in relation to the USA. This means the end of simplified trading.

The Chinese authorities did not take long to answer and said on Tuesday that American actions are contrary to international law and are a direct intervention in the country's domestic policy. The American government, trying to impose its own view on the Hong Kong problem, is crossing the legal frontiers. And the law issued, which relates to the autonomy of Hong Kong, is generally a direct intervention in domestic public affairs. The Ministry of Foreign Affairs of China has already protested against the actions of the United States.

Against the background of these misunderstandings, the Shanghai Composite China Index began to move down and fell 0.4% so far. Hong Kong's Hang Seng Index remained virtually unchanged.

Japan's Nikkei 225 Index, meanwhile, rose by 1.7%. It received a positive influence from the country's chief regulator, who decided not to adjust the basic interest rates in the near future and to continue the super-soft monetary policy in order to maintain the growth of the state economy. The Central Bank of the country said that there is no hope for a quick economic recovery and will not appear yet since the coronavirus infection pandemic had too serious an impact on economic growth. Of course, the situation will begin to improve very soon, but the pace of this recovery will not be too fast. The recovery will take place gradually, and its results are likely to appear in the second half of this year. Restrained growth is due to the fact that measures taken in coping with the COVID-19 pandemic has not yet succeeded, and the world is on the verge of a second wave of this pandemic.

The South Korean Kospi Index rose 0.9%.

Australia's S & P / ASX 200 Index went up by 1.7%.

US stocks also went on a positive trend due to the satisfactory results of the released quarterly reports of the banks. This is amid the serious effect of the pandemic in the economy.

Market participants are preparing themselves for a potential decline in the company profits which is reflected in the main stock indicators. Thus, companies in the S&P 500 index may lose up to 45% or more of profit per year.

Nevertheless, while the American market looks quite confident, and negative forecasts have not begun to act on market participants who are in high spirits about the restoration of economic growth and the continuation of the soft stimulating monetary policy of the Federal Reserve of the United States of America.

Experts point out that the recovery of the US economy will be rather difficult and will encounter many limiting factors that will make this path even more thorny. In order to support this process, the state should continue to purchase a significant amount of assets for a rather long time so that vague prospects take on at least some shape.

In the meantime, economists are discussing plans for the future, coronavirus infection continues to hit America more severely across the entire territory. A record number of patients is recorded almost every day. New restrictive measures are already gradually being introduced in different states. All this, of course, does not contribute to the healthy development and growth of the economy and makes investors think about future prospects.

The Dow Jones Industrial Average managed to grow by 2.13% or 556.79 points, which sent it to the level of 26,642.59 points. This one has been booming for the third consecutive trading session.

The Standard & Poor's 500 Index gained 1.34% or 42.30 points. Its current level is located within 3 197.52 points.

The Nasdaq Composite Index showed a more restrained growth of 0.94% or 97.73 points, which allowed it to move to the mark of 10,488.52 points.

Europe stocks, on the other hand, began the trading session with a positive attitude, which led them to grow amid news of an upcoming vaccine against coronavirus infection. In addition, market participants are determined that during the next EU summit a decision will be made to continue and expand monetary stimulus in the territory of European states.

The German DAX index rose to 0.7%. France's CAC 40 index is up by 0.9%. The UK FTSE index showed an increase of 0.9%.

The most notable event during this day was brought by the news that the world could soon see an effective vaccine against COVID-19, which ultimately will play a decisive role in the fight against this disease.

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