March 28, 2023
Markets on Edge as U.S. Stimulus Hopes meet Pandemic Resurgence

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On Friday, financial markets remained a bit shaky as hopes for a new fiscal stimulus package in the U.S. met fears that the economic recovery would be undermined by the social restrictions needed for tackling the second wave of the coronavirus pandemic. Asian stocks and oil prices dipped, but European stocks made a recovery during morning trading after they had dipped sharply the day before. Market strategists said that it is more of a tug-of-war of risks that are taking place nowadays with the U.S. election, Brexit, and the pandemic happening simultaneously, but there is hope that these risks would be resolved within a matter of weeks or some months.

Meanwhile, considering all the uncertainties in the market, it is becoming difficult for investors to take positions in the short term. However, experts said that if we look towards 2021, there was a possibility that these risks would be resolved by then. There was an 0.8% gain in the pan-European STOXX 600 about an hour after it opened. On Thursday, they had declined by about 2% due to new social restrictions imposed in Europe, which include tighter restrictions in London and a curfew in some of the French cities, ended up spooking investors. 

The euro managed to regain some ground as it increased by 0.1% to reach $1.1717, as investors decided to move towards riskier currencies and away from the perceived safe-havens, such as the yen and the U.S. Dollar. The 10-year bond yield in Germany was set for its biggest drop in a week since August due to the increasing doubts about economic recovery happening in the eurozone. There was still a lot of uncertainty surrounding the negotiations between the UK and the European Union, as Boris Johnson, the British Prime Minister, is expected to respond to the demand of more concessions made by the European Union. 

There was a 0.2% gain in Sterling against the euro, as it reached 0.9050 pence and there was a 0.3% climb in the pound against the U.S dollar at $1.2938. Oil prices continued to fall, brought down by concerns that demand would decline because of the resurgent cases of COVID-19 across the United States and Europe. There was a 0.5% drop in Brent crude futures to $42.93 a barrel. There was also a 0.4% dip in November delivery of the US West Texas Intermediate (WTI) crude futures to $40.81 a barrel. 

While the prices for spot gold remained flat at $1,909.05, they looked set for their first weekly decline in three weeks. Likewise, futures for the S&P 500 at Wall Street were flat after they ended lower on Thursday due to a rise in jobless claims on a weekly basis. On Thursday, the offer made by U.S. President Donald Trump for increasing the size of a fiscal stimulus package for winning the support of Democrats and Republicans that helped in narrowing the losses on Wall Street. However, a number of investors still believe that a deal is not likely to happen before the November 3rd elections.

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