Markets kicked off the week on a mixed note, as investors couldn’t decide on where to go next as two major opposite forces muddle the sentiment at the moment: the rise in new coronavirus cases and the massive monetary and fiscal interventions.
Low volumes and high volatility were on the menu of Monday.
Asian indices painted a mixed picture. Major Asian indices and US equity futures first slumped, then recovered into the afternoon session. The Nikkei (0.25%), the ASX 200 (+0.18%) and the Shanghai’s Composite (+0.28%) turned positive, but the Hang Seng (-0.32%) remained offered as news that China will open a bureau in Hong Kong to ‘lawfully handle national security cases’ and gather intelligence has not been a positive development for the HK’s freedom.
The People’s Bank of China (PBoC) maintained its 1-year LPR rate unchanged for the second straight month despite the recent lockdown of certain food businesses near Beijing.
The Dow futures tumbled over 200 points before switching to gains, but the European futures extended losses. FTSE (-0.70%) and DAX futures (-0.98%) point at a weak start to the week, but the market sentiment could change rapidly here as well.
Meanwhile, news of recent uptick in Covid-19 cases in Germany could give cold feet to European investors reminding them that the risk of a second wave is serious in the old continent. But the rising risks also increase the chances of the latest 750-billion euro fiscal rescue package to be accepted among the EU nations before July 9, or at least to encourage policymakers to find the best possible solution to avoid a severe recession across the bloc.
By Ipek Ozkardeskaya
