May 13 2020 0
The market can be seen to be reacting strongly to China. The events in this country recently have caused interesting developments in the market. Let’s see what those trading strategies are and how we can take advantage of that in the article below.
About the outbreak
Anthony Fauci, the US government's leading infectious disease expert, said in a Senate hearing that "the consequences could be really serious" if the nation loosened restrictions too soon. He said there were at least eight potential Covid-19 treatment vaccines under development, although he doubted that any of them would be complete by this fall.
Wuhan will test the entire population of 11 million after China's epidemic center city began reporting new cases for the first time since the blockade was lifted. The spokesman of Russian President Vladimir Putin is the latest senior official who is ill. A payroll program in the UK has been renewed, while the Health Minister said it is hard for people to travel abroad this summer. Sweden will adjust an important factor in its strategy after the death rate soars. Viral infections worldwide have reached 4.2 million, with deaths exceeding 286,000. Meanwhile, survivors of a viral infection may experience severe effects many years after the pathogen is gone.
Market is still down
Asian stocks were poised to go down after a drop in US stocks because of a warning not to open the economy early from a top US health official and when traders rated a trade. Terrific expectations from regional directors of the Federal Reserve. Treasury bonds gained. The futures market in Japan and Australia slumped, while the futures in Hong Kong earlier rose higher. S&P 500 index futures fell at the open. The benchmark dropped as Anthony Fauci, the nation's leading infectious disease official, said that reopening too quickly could be a barrier to economic recovery. Meanwhile, some central bank officials said a virus outbreak and partial shutdown will increase the risk of bankruptcy, affecting the economy in the long term. Elsewhere, the yen and oil prices rose, gold at $1,702.69 / ounce.
A lot of Rupee
Indian Prime Minister Narendra Modi said his government would spend a total of 20 trillion rupees ($265 billion) to help Asia's third-largest economy overcome the coronavirus pandemic. "This stimulus package, which accounts for 10% of gross domestic product, will help the economy regain its performance after weeks of restraint at home," Modi said. The figures announced by Modi will include more than 5.5 trillion rupees for measures already disclosed by the government and central bank. Modi said the stimulus package "will focus on areas such as land, labor, liquidity and the law" - all details will be revealed by the Ministry of Finance from Wednesday. The proposed spending plan, along with tax reductions for new plants and incentives for foreign companies, is an attempt by the Modi administration to attract investors. India is approaching its economic contraction for the first year after four decades and an estimated 122 million people will lose their jobs in April while consumer demand is losing steam.
The waiting game
It seems that investors in China are quite satisfied with the current government measures to support their declining economy. However, they still want more stimulation. To assess uncertainty in the Chinese financial market, the outcome of this month's key policy meetings could be a decisive factor for investors. Although volatility in the stock market and the yuan have dampened expectations, investors will ensure stability before May 22, so traders are still ready to take big risks.
Stock valuations are struggling due to the decline in corporate profits - which is unlikely to recover early from the worst first quarter since at least 2003. Signs of weakening seen in the decline in stock revenue and the weakness in the CSI 300: the benchmark could not move more than 2% in both up and down in the 22-day consecutive trading session. On Tuesday, it completely stood still at the close. Beijing has been hinting at more support as central banks promised to implement stronger policies on Sunday. It can be said that stimulus measures are the only catalyst that investors can count on to assess the reaction in the market this week.