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The European-American stock market falls together … 4% per barrel of WTI ↓
Due to the presidential elections, volatility inevitably expands at the moment
The deal on additional stimulus measures in the US, which had been slow, seems to be burning fast
The nomination ceremony of the United States Supreme Court Justice Amy Connie Barrett, held in Rose Garden, the White House, on the 26th of last month, is pointed out as the epicenter of the spread of Corona 19. Most of the Attendees did not wear masks on this day. President Donald Trump and candidate Barrett take the podium. AP Yonhap News
US President Donald Trump was admitted to a military hospital with a new coronavirus infection (Corona 19), and the US presidential elections (November 3), which were approaching a month away, fell into chaos. As President Trump’s illness and the uncertainty surrounding the presidential elections have amplified, the global financial market has found itself in a situation where it is impossible to know where to go.
President Trump posted a video on Twitter on the 3rd (local time), saying: “I felt bad when I came here (military hospital), but now I am much better.” He said: “We will be back soon” and “I look forward to finishing the election campaign.” However, he said, “The next few days will be a real test,” suggesting that the recovery will take time to complete. White House Secretary Mark Meados said a few hours earlier that “the next 48 hours will be an obstacle.” “The president has not yet entered a full recovery path.”
The financial market fluctuated on the 2nd on the news of President Trump’s confirmation. The US stock market, which had risen two days to the previous day, fell at the same time as the Dow index (-0.48%), the S & P500 index (-0.96%) and the Nasdaq index (-2, 22%).
Global financial markets are also tense
The positive test of the new coronavirus infection (Corona 19) from the president of the United States, Donald Trump, has become the most important variable in the world stock markets. This is because the political and economic uncertainty surrounding the economic and political policy of the US presidential elections (November 3) with less than a month to go is extremely amplifying. It is observed that the financial market will fluctuate according to the health of Trump, which is released intermittently.
The fear index rises and oil prices plummet
On the 2nd, when the Trump news was confirmed, the US New York Stock Exchange immediately closed lower. The Dow index, which once fell 430 points during the week, closed the deal at 27,682.81, down 134 points (0.48%). The Nasdaq fell 2.22% to close at 11,072.02. It is an analysis that the possibility of election of the presidential candidate of the Democratic Party, Joe Biden, who agrees to raise the corporate tax rate as a promise to be elected, has become a major bad news for the Nasdaq market where they are present. many big tech companies. Eurostock 50, a pan-European index, also fell 0.10% to 3,190.93.
The volatility index (VIX) of the Chicago Options Exchange (CBOE), known as the Wall Street fear index, soared. It ran more than 10% for the week and ended at 27.63, an increase of 3.48%. International oil prices also reacted sensitively. West Texas Crude Oil (WTI) for November delivery on the New York Stock Exchange (NYMEX) fell 4.3 percent to $ 37.05 a barrel. It is the lowest since the 8th of last month. Phil Flynn, senior analyst at Price Futures Group, said: “Trump’s confirmation raised fears about the second Corona epidemic” and “negative news for the economy and the energy industry.”
It is pointed out that the biggest problem is the increase in uncertainty. If Trump’s illness worsens, he could face an unpredictable situation in which the president must elect the next president while he is unable to serve. “The market hates uncertainty,” said Lisa Ericsson, senior vice president of US Bank, in an interview with The Wall Street Journal, predicting that volatility will increase for the time being because uncertainty has increased at the end of the presidential campaign.
However, it is difficult to analyze that the impact of the stock market will be limited, since Trump’s state of health is not clearly confirmed. Strategist St Deweg Naticsys Investments noted that “after Trump’s confirmation, the global stock market showed an immediate reaction, but it is too early to set a direction.”
US Stimulus Policy May Be Agreed Sooner or Later
Despite the news of Trump’s confirmation on the 2nd, the reason the US stock market fell in the afternoon was due to US Congress negotiations for a new stimulus package. This is because large-scale liquidity, such as in the first half of this year, will be reintroduced if it is terminated. House Speaker Nancy Pelosi (Democratic Party) appeared on MSNBC that day and said: “The dynamics of the stimulus negotiations will change because President Trump would have faced reality after being infected with Corona 19 Explained.
In addition, he added that the plan to support the aviation industry will be included in this stimulus plan or will be prepared as a separate bill. Republican Senate Representative Mitch McConnell also said, “The stimulus deal is close.”
The Democratic Party, which took control of the House of Representatives, approved an additional $ 2.2 trillion stimulus the night of the first day, but the Trump administration raised a tax burden and offered $ 1.6 trillion. The stimulus plan, which has so far failed to find a point of consensus, is an environment that is increasing rapidly after Trump is confirmed. This is because the severity of the Corona 19 crisis has been highlighted, and the Trump camp cannot simply delay the stimulus voters are waiting for in the face of major bad news. On Twitter last weekend, Trump urged, “The greater America wants and needs encouragement” and “let’s work together to finish it.”
Thomas Block, a strategist at Fundstrat, an investment advisory firm in New York, said: “The confirmation of the president is an event that reminds us how serious the Corona 19 pandemic is.” did.
New York = Cho Jae-gil / Washington = Correspondent Ju Yong-seok [email protected]
