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Friday, November 27, 2020

US Equity on Supervision by Investors as European Stocks Pare Gains

The stocks in the European markets have been struggling to keep control over their gains, as US investors look towards US Equity and the new stimulus package. The European stocks had actually received quite a boost through the stimulus package, and the data of Chinese growth. Euronext had a glitch that lasted two hours, which resulted in several exchanges not being able to trade- but the problem has now been resolved. The French CAC 40 had been largely frozen with a gain of around 0.8%- when the trading was initiated again. Lastly, it had risen up to 0.3%. 

How Does The US Equity Affect the European Stock Market?

The index of Stoxx Europe 600 ended up erasing a large part of its earlier gain in order to trade at 369 flat, with a drop of 0.8% in the last week. The German DAX also fell 0.1% with the FTSE 100 dropping close to 0.2%. The struggles continued for the stocks in the UK while everyone was watching the US Equity, as the GBPUSD finally found some strength on Monday, as it rose about 0.7%. The pound had previously shrugged off the ratings of last Friday as it was quite a downgrade from the rating agency of Moody- which did bring out some concerns about the economic hit to the country- and a fear of Brexit with no deals. 

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Most of the traders have been attributing the rise of the British pound to Michael Gove, the US lawmaker- who mentioned on Sunday that there were still chances of post-Brexit talks which would be going on with the EU. This information came after Boris Johnson mentioned on Friday that the talks for trade probably wouldn’t continue unless there was a shift in the definite position. 

How Far Along is the US Stimulus Package?

The focus on US equity and stimulus package comes after Nancy Pelosi brought out a 48 hour deadline for the Oval Office to create a deal with the opposition that will guarantee a stimulus package, right before the Presidential Elections. Pelosi was extremely hopeful about a positive result- after intense negotiations with Steven Mnuchin- the Secretary for Treasury. 

The Senior market analyst for Oanda, Jeffrey Halley, spoke about how the markets were quite relieved that both the parties were willing to continue their talks, before the Presidential Elections took place. The markets also haven’t been much concerned with the actions of the Senate Republicans in disrupting the legislation of the stimulus checks- when they are all trying to clear some bad air between the POTUS and themselves. 

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Many investors have been focusing on the stimulus package- seeing it as something vital for the coronavirus cases seem to be building in the country. Last Friday saw close to 70,000 more cases- which is the highest it has been reported- since July. Therefore, it comes as no surprise that investors have been looking towards US Equity to make sure that their own stocks remain above water. 

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