Recent times haven’t been kind on anyone, especially the stock market. It has been witnessing even more instability than ever before. While the US dollar recovered recently, investors fear a possible second wave of COVID-19 damages to EU Stoxx.
While many countries are coming out of months-long lockdowns, the European region is witnessing a possible second wave of COVID-19. As restrictions tightened in most European countries recently, the EU Stoxx saw a significant drop of more than 4 percent.
In the Asia-Pacific trade region, the equity market has been dropping continuously as fears of a possible second round of coronavirus restrictions appear. In addition to that, the non-action of Congress with regards to stimulus aid to the economy has further concerned the investors.
Even though the Japanese Yen and the US Dollar made a comeback recently, the Australian dollar fell below the harrowing 0.7 level. This happened right after Guy Debelle, the deputy governor of the Australian Reserve Bank announced that they do not intend on releasing any new stimulus package for the falling economy.
Silver and Gold dropped as well. Additionally, the greenback saw difficulty with its commodity prices as well. It is quite clear that the EU Stoxx is not the only one that’s struggling.
Second Wave Of COVID-19 Pandemic Lends To EU Stoxx Volatility
It’s no news that the EU Stoxx has been hit. What’s worrying is that the investors are losing hope as European countries continue to impose harsh restriction measures without any stimulus to the economy.
In fact, many nations are trying to avoid hurting the economy more than it has already been hurt. Even though France is emerging as a new COVID-19 hotspot, neighboring nations like Germany, France, Italy, and Spain are trumping to avoid increasing further coronavirus restrictions.
However, it looks like restrictions that will heavily impact the economy will be put into place in the coming months. Especially after Hans Kluge, the WHO director of Europe warned citizens and the European governments of the second wave of COVID-19.
The DAX 30 Volatility Index and the EU Stoxx both indicate that the market and investor sentiment is gradually souring. Additionally, since it looks like the health of the general population will deteriorate in the coming months, the short-term regional risk asset is also getting hampered.
To further prove the souring market sentiment, we can look at the massive drop of 4.24 percent in the EU Stoxx. Moreover, since the MACD indicator has gone into negative territory, it looks like things will further be pushed lower.
Given the precarious nature of the already untraveled EU Stoxx, the government should be taking a very careful assessment and steps on how to handle the potential second wave of coronavirus so that it does the least damage to the falling global economy.