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29.07.2020 04:01 PM
US stocks decline, while European and Asian stocks moved indefinitely

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Asian stock markets showed uncertainty and moved multidirectional on Wednesday. This was due to a not so very encouraging statistics on the work of companies in the region in the second quarter, which is still published. It also forces market participants to return to an extremely unpleasant issue for them regarding the more significant than previously assumed, the consequences of the crisis caused by the coronavirus pandemic. The scale of the disaster can be much more significant, and in order to cope with the consequences, it will take more time and effort.

Japan's Nikkei 225 index went down Wednesday morning and fell 1.18%. A significant decline in the country's economic development against the backdrop of the coronavirus forced the country's level in the ranking to change. Thus, the forecast for Japan has moved from "stable" to "negative". At the same time, the state was not even helped by the fact that it got up to fight COVID-19 earlier and more effectively than others. The Japanese economy has still not been able to successfully cope with the negative impact of the virus.

China's Shanghai Composite index, on the contrary, began to fix the positive sentiment, which eventually led to a good growth of 1.52%. Hong Kong Hang Seng Index was also able to climb by 0.36%. However, the situation may change overnight after the press releases data on the level of Hong Kong GDP for the second quarter of this year.

In addition, the situation in the United States of America is putting pressure on the Chinese stock market. For the second day in a row, the country's Federal Reserve System, during its regular meeting, is trying to come to a consensus on the base interest rate. According to preliminary and more obvious data, the rate should remain unchanged at the extremely low, tending to zero level that is observed at present. Moreover, maintaining this low level is strategically important at a time when the country is still struggling to overcome the coronavirus crisis.

Another important issue for the Federal Reserve will be a new portion of stimulus measures that can support the further economic recovery of the state. However, it becomes clear that there is no need to wait for further incentives since the Central Bank has repeatedly adhered to the political line that was adopted before. As long as the situation with the coronavirus remains so tense and there is no clarity in this regard, financial incentives will be a waste of money. According to some experts, continued incentives will not only not help level the situation, but will drive everyone into a dead-end even more.

South Korea's Kospi index is rose by 0.34%.

The Australian index, on the other hand, shows negative dynamics, which is within 0.24%.

Meanwhile, according to the results of Tuesday's trading, US stock exchanges turned out to be in a negative sector: a decline was recorded in almost all directions.

The Dow Jones Industrial Average fell 0.77% or 205.49 points. This forced it to move to the level of 26,379.28 points.

The Standard & Poor's 500 index sank 0.65% or 20.97 points, which moved it within 3,218.44 points.

The Nasdaq Composite index declined by 1.27% or 134.18 points. Its current level is at around 10,402.09 points and was also the lead in the fall.

Market participants reacted with undisguised disappointment to the proposal of the Republicans to ratify a new portion of stimulus in the amount of $ 1 trillion. At the same time, the existing unemployment benefit premium should be significantly reduced from 600 to 200 dollars. However, the very fact that aid should continue to be provided is perplexing the US authorities, who are caught between two fires. Representatives of the Central Bank are actively promoting the idea of refusing to further stimulate, while the Republican Party insists on the opposite, in an abbreviated version. The Democrats, on the other hand, are in solidarity with the Republicans in this case and support the preservation of premiums at the current level.

However, the stock markets can only be saved by consent from this continuous decline, which the US government have never been able to obtain. If there is no consensus before Friday, when current benefits expire, the value of stocks in the stock markets could be further reduced.

At the same time, the consumer confidence index in America in the second summer month of this year fell to 92.6 points, which came as a complete surprise to analysts who, although claimed that there would be some correction, did not expect it to be so serious. Recall that in the last period, that is, in June, the indicator was within 98.3 points, and the expected reduction should have amounted to no more than 94.5 points. So far, investors do not fully assess the current events, but even this does not give them the opportunity to feel at least some confidence.

The European stock exchanges have preferred to stop and wait since the economic, geopolitical, and epidemiological backgrounds force us to think hard about every further step. There is practically no dynamics in the markets. And the main event here is also the meeting of the Federal Reserve of the United States of America.

The general index of large enterprises in the European region Stoxx Europe 600 slightly rose by 0.08%, which sent it to the level of 367.99 points.

The UK FTSE 100 Index showed positive dynamics and rose 0.28%.

France's CAC 40 index also rose 0.69%.

In contrast, Germany's DAX index recorded a 0.2% contraction.

Spain's IBEX 35 Index supported the negative trend and dropped 0.51%.

Italy's FTSE MIB index is also in the red zone with 0.63%.

Maria Shablon,
Pakar analisis InstaForex
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