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Analysis News:::2020-07-20

Global stocks faced too much pressure and bad news


The Asia-Pacific stock markets are showing negative dynamics in almost all directions on Monday. The reason for this can be called the protracted summit of the member countries of the European Union.

It should be noted that earlier only two days were planned for the meeting of the heads of state in Brussels, but the event dragged on for four, which could not but remain unnoticed by market participants and cause them some tension. At the same time, a rather tense atmosphere of the entire negotiation process is noted, which is connected with the fact that all twenty-seven participants cannot come to an agreement on the main issues. So, there is an acute discussion of the seven-year budget of the EU, as well as plans to restore the region's economy from the effects of the crisis associated with the coronavirus pandemic.

However, the release of the next portion of the reporting data of the largest companies, as well as statistics on the growth of the economy of the United States of America, will take even more attention to APR investors this week. Serious concerns are particularly focused on the US employment data which is awaited with marked impatience.

China's Shanghai Composite Index is perhaps one of the few to show a 2.8% increase, among other things, negative. The Hong Kong Hang Seng Index followed suit and gained 0.2%. Here, there was more positive pressure from the country's main regulator, the People's Bank of China. As it became known, the PBC made a decision to leave the base annual interest rate unchanged for another period. It should be reminded that a few months ago the regulator lowered it to 3.85% in order to support the economy of the state, which suffered from the crisis. The government's expectations were met, and the economy began to gradually strengthen, as evidenced by statistics on the country's GDP. So, in the first month of summer, this figure has increased by 3.2%.

However, this is where the positive ends.

Japan's Nikkei 225 index is down 0.07%. The reason for the reduction was the disappointing export data in the country. Thus, in the first month of summer this indicator fell sharply by 26.2%, which became the fourth serious fall in a row.

South Korea's Kospi index also dipped by 0.1%.

The Australian S & P / ASX 200 also supported the negative dynamics, which dropped 0.6%.

Multidirectional dynamics was noted on American stock markets. The past week was a breakout for the Dow Jones and S&P 500 indices, while the Nasdaq moved to a negative correction, which has been going on for the third week in a row. Thus, the increase of the former was at the level of 2.3% and 1.3%, while the latter lost 1.1%.

Market participants are seriously concerned about the preliminary data on the consumer confidence index in the United States of America. The University of Michigan lowered its forecast to 73.2 points from the previous data of 78.1 points. At the same time, the experts were not ready for such a turn of events and expected growth to the 79-point mark.

However, there is still a reason for such a significant drawdown, and it is quite weighty. The number of new cases of coronavirus infection in the United States of America is growing steadily. And if the authorities of the country do not take decisive measures in the near future to combat the spread of the infection, the situation may double as well, and investor sentiment will become even more depressing than now. In any case, America is approaching the moment when it will have to quarantine enterprises again, which will be another and very heavy blow to the economy, which will be extremely difficult to survive.

However, the government, feeling the severity of the situation, hastened to lay a little straw to cushion the blow to the market. Thus, a new stimulus package was adopted for ratification. The Federal Reserve, in particular, has made the program supporting small and medium-sized businesses even broader by including non-profit organizations so that more businesses can get into it. This could be the impetus for a bullish trend in the market.

The Dow Jones Industrial Average index showed a decline of 0.23% or 62.76 points, which forced it to move to the mark of 26,681.95 points.

The Standard & Poor's 500 Index, on the contrary, increased by 0.28% or 9.16 points. Its current level was within 3,224.73 points.

The Nasdaq Composite also rose by 0.28% or 29.36 points, which sent it to the level of 10,503.19 points.

Stock markets in Europe opened in the negative zone where the reduction was recorded almost everywhere. The decline was due to the news during the EU summit where it was decided to lower the fund for the restoration of the region's economy, contrary to what was previously announced. The leaders of the EU countries could not come to a consensus on the distribution of 750 billion euros, which was supposed to be placed in a specially created recovery fund. This made investors seriously think about the future of the region's economy.

The German DAX index is down by 0.4%. France's CAC 40 index fell 0.6%. The UK's FTSE fell the lowest at 0.8%.

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