- European stocks launched the week on a negative note
- US lift Taiwan restrictions
- President Trump facing possible second impeachment
European bourses finished the first session of the week in red amid concerns regarding the record number of COVID-19 infections and hospitalizations. The total coronavirus cases surpassed 90 million and the most of European countries remain under strict restrictions. The UK government considers implementing additional COVID-19 related restrictions in England amid warnings that the current lockdown measures may not be tough enough. Bank of England policymaker Silvana Tenreyro said that lowering interest rates below zero could boost the economy by more than expanding bond purchases. She also warned that the recent intensification of the current wave of Covid would imply a worse near-term outlook than anticipated in November, before the economy starts a now less uncertain recovery later in 2021. Markets expect an interest rate cut as early as May. DAX 30 and CAC 40 both dropped 0.8% and FTSE 100 finished 1% lower.
US indices are also trading under pressure as tensions between Beijing and Washington intensified after the US said they were lifting restrictions on Taiwan. Also political tension in the US weighed on the sentiment. Today House Democrats introduced an article of impeachment against President Trump for inciting the mob attack at the Capitol. The lower chamber plans to vote on the article sometime this week. These concerns outweighed prospects of more fiscal stimulus. On Friday President-elect Joe Biden announced plans for "trillions'' in new relief bills, much of which will be paid for by increased borrowing. More details regarding the new stimulus package will be provided on Thursday. However, looking at the recent increases in some asset classes, despite continued political uncertainty and the worsening pandemic situation, some investors believe that the markets have become too exuberant. Shares of Tesla, for example, surged 25% only last week and 800% in the last 12 months. They now trade for around 90-times 2021 cash flow. Bitcoin fell from record high at $41,800 to $30,000 only on Monday. Meanwhile the number of COVID-related deaths and hospitalizations continues to increase. More than 374,000 people have died in the US since March and over 22.4 million have been infected. Arizona, California, Oklahoma, Rhode Island and South Carolina are currently the worst-affected regions. At the same time, coronavirus hospitalizations surpassed 100,000 for the 40th day in a row. Elsewhere, Mainland China reported its biggest daily rise in Covid-19 infections in over five months.
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Create account Try a demo Download mobile app Download mobile appUS crude futures are trading 0.15% higher at $52.31 a barrel, while Brent contract fell 0.30% to $ 55.78. Elsewhere, gold futures rose 0.06% to $ 1,849.00 / oz, while silver fell 0.88% and is trading near $ 25.14 / oz as bond yields remained high in the United States.
USDJPY – pair managed to break above the 50 SMA (green line) during today’s session and is currently testing long-term downward trendline. Should a break above the trendline occur, upward move towards local resistance 104.78 at may accelerate. On the other hand If sellers manage to halt advances here, the downward move into 103.65 is possible. Source: xStation5
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