Finance Research
Market Today
Indices
S&P 500 (+0.65% at 3118) Dow Jones (+0.59% at 26, 025) NASDAQ(+1.11% at 10, 056), all the three major United States’ indexes finished with a substantial gain. This has been attributed to the US reopening of the economy today (Carpantier, 2020). As people started economic operation in the country today, which further improved the exchange rate of the stock exchange.
FTSE 100 (-0.76% at 6244.62) UK stock dropped on Monday due to investors’ fear of the second Coronavirus wave striking the stock market, (Carpantier, 2020).In general, the whole of the European market has fallen red today due to the coronavirus pandemic second wave strike in the UK.
Nikkei 225 (+0.89% at 22, 636.46) stock rose on Monday due to a flattening curve of the coronavirus. Now, the investors hope that economic activities will improve sharply in the coming days. Further, with the reopening of the US economy, Japan has also increased economic activities to meet the US economy’s supply of trading products as soon as possible.
Forex
US Dollar Index (DXY): the value of dollar continue to rise above all the other major currencies due to the reopening of United State economy even the coronavirus pandemic continues to spread at a very high rate in the country. (DXY: 0.59% at 96.96)(Nguyen et al., 2020).
EUR/USD: this pair today rose further and reached the highest level since 17 June 2020. This is due to the US dollar lower adjustment after it rose in the last three days (Carpantier, 2020). This is also a result of the rise in the US dollar due to an increase in the Chicago activity index and existing homes sales (Nguyen et al., 2020). Further, the US economy has started reopening. The economic reopening has also stimulated USD as Europe continues to recover from corona impacts. (EUR/USD: +0.70% at 1.1255)
Japan Yen: The USD/JPY pair remains stable even with the Pre-Tokyo opening Asia opening session today (Walker et al., 2020).Focusing on the challenge of market optimism that the US has triggered, it has negatively affected USD/JPY. This pair is expected to rise due to the reopening of the US economy. (USD/JPY: 0.02% at106.89)
British Pounds: The GBP/USD pair has calmed down after the selloff that took place on 21st in Asia to almost 1.145 (35-year bottom). This is a result of a rise in coronavirus and risk-off fear of traders and investors who are now holding greenback (Walker et al., 2020). Although this pair had recovered in Europe from 1.147 to 1.160, it seems swinging down sideways without recovery signs. (GBP/USD: -0.47% at 1.2366)
Commodities
Gold price rises by 1% and hits its highest price. This is, as a result, an increase in its demand as many investors took refuge to invest in gold as the economy starts reopening and recovering after high hit by coronavirus pandemic (Nguyen et al., 2020). Further, the investors are considering investing in gold as the only haven metal due to delayed reopening of the global economy following surging worsening of coronavirus pandemic (Gold Prices: +0.3% at $1,748.05).
Oil prices rose as its demand increases due to the easing of lockdowns in many countries globally. Since the coronavirus pandemic spread globally, the oil price has decreased due to the reduced demand for oil as most countries were under a shutdown (Walker et al., 2020). The oil price increase is an indication of the global recovery from lockdowns brought about by the coronavirus. (Brent Crude Futures: +1.4% at $41.36 a barrel. WTI Futures: +1.3% at $38.69 a barrel).
Economic Indicators
Americans
President trump announced the reopening of the American economy again. In his speech, he explained a three-phase approach that Americans would use to open its economy. This will ensure that American gets back to work while protecting the lives of Americans (Nguyen et al., 2020).
April lockdown in the United States due to the coronavirus pandemic has negatively affected April home as sales for single homes fall by 9.4% while that of condo declined by 12.8% (Walker et al., 2020). This is due to lockdown as most US citizens traveled to suburban homes in fear of the coronavirus outbreak (Prem et al., 2020).
“The China trade deal is fully intact,” this is after the US present confirmed that the trade deal between the two big countries continues facing changes due to their trade war. US President Trump clarifies the following sentiments encored by Navarro that the USA-China trade deal is over.
30% of the Americans failed to pay for the house for June. This has attracted high eviction as missed payments are still very high (Prem et al., 2020). This is a result of the harsh economic that most of Americans are facing as a result of coronavirus pandemic in the country. Most of the affected ones are the renters and low-income earners who risk eviction the landlords.
Europe
Impact of COVID-19 in EU trade with China. This report indicates that trade between Europe and China has been highly hit by coronavirus pandemic with some of Europe countries such the United Kingdom failing to export 40% of her total exports to china while china failing to export about 60% of the total exports to Europe (Walker et al., 2020).
Rise in unemployment rates in Europe. As a result, coronavirus pandemic European countries have reported an increase in the unemployment rate from 6.4% in March 2020 to 7.3% in June 2020 (Walker et al., 2020). The rise in unemployment rates is reported two months after European countries implemented harsh COVID-19 containment measures such as the total shutdown of Italy’s economy.
Asia and Pacific
Asia risks resetting back to the green economy aft coronavirus pandemic. Asia countries have reported high hit by coronavirus pandemic to extend that the region cannot reset itself back to the green economy (Griffith et al., 2020). According to the report released indicated that most of the citizens in the area are unemployed due to increased unemployment rates, and the countries are facing a financial crisis as a result of the current economic shutdown.
Asia countries suffer severe economic retardation as a result of coronavirus pandemic. Most of Asian countries have predicted a shrink in their economic development, with the South Korea economy expected to shrink by 1.2% while that of Thailand and the Philippines to contract at a rate of 1.3%.
Economic policy
American
President Trump calls for tax cut measures to avoid another great recession in the US (Griffith et al., 2020). In his speech, the US president said that the senate must urgently act to formulate tax cut measures to ensure that every American family head can feed their families.
The federal policy strategy: due to the high impact of coronavirus pandemic in the United States, US government has released a report on its fed listens to initiatives that aim and reviewing the current monetary policy that aims at releasing more funds from the federal reserves to boost the economy reopening.
Europe
Europe commission president Von der Leyden has announced the EU budget for economic recovery and kick-starting. Following this announcement. All EU members are likely to benefit from such budget, (Prem et al, 2020).This aims to ensure that both public and private sectors have enough resources for economic development. Further, this will reduce the number of unemployment in Europe as a result of Coronavirus pandemic impacts.
Asia and pacific
The FAO’s Regional Office for Asia-Pacific published several regional policy briefs aiming to analyze and prevent coronavirus impacts, (Griffith et al, 2020).Such policies focus on the supply of food to feed the Asia-Pacific region. Such policies will ensure that their hard-hit individual by coronavirus pandemic is able to feed themselves together with their families. This is because coronavirus pandemic has collaterally affected and damaged agricultural activities in the region.
References
Carpantier, J. F. (2020). Commodity Prices in Empirical Research.
Angelopoulos, J., Sahoo, S., &Visvikis, I. D. (2020). Commodity and transportation economic market interactions revisited: New evidence from a dynamic factor model. Transportation Research Part E: Logistics and Transportation Review, 133, 101836.
Nguyen, Q. N., Aboura, S., Chevallier, J., Zhang, L., & Zhu, B. (2020). Local Gaussian correlations in financial and commodity markets. European Journal of Operational Research.
Nguyen, D. K., & Walther, T. (2020). Modeling and forecasting commodity market volatility with long‐term economic and financial variables. Journal of Forecasting, 39(2), 126-142.
Griffith, J., Najand, M., &Shen, J. (2020). Emotions in the stock market. Journal of Behavioral Finance, 21(1), 42-56.
Bondarenko, O., &Muravyev, D. (2020). Market Return Around the Clock: A Puzzle. Available at SSRN.
Sakuragawa, M., &Sakuragawa, Y. (2020). Government fiscal projection and debt sustainability. Japan and the World Economy, 101010.
Prem, K., Liu, Y., Russell, T. W., Kucharski, A. J., Eggo, R. M., Davies, N., …& Abbott, S. (2020). The effect of control strategies to reduce social mixing on outcomes of the COVID- 19 epidemic in Wuhan, China: a modelling study. The Lancet Public Health.
Walker, P. G., Whittaker, C., Watson, O. J., Baguelin, M., Winskill, P., Hamlet, A., …& Thompson, H. (2020). The impact of COVID-19 and strategies for mitigation and suppression in low-and middle-income countries. Science.