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COVID-19 pressure continues to worry investors; world equities fall - Market Overview

COVID-19 pressure continues to worry investors; world equities fall - Market Overview

The risk sentiment in the markets deteriorated as the epidemiological situation got worse in Asian countries and Oceania.

The latest state to announce a national lockdown with immediate effect was New Zealand.

#NZD suffered a severe fall because its central bank could delay adjusting its monetary policy towards a more restrictive approach. However, it will all depend on the epidemiological conditions.

Elsewhere in the U.S, the retail sales number fell by 1.1% in July primarily due to the consumer sector (compared to a drop of just 0.3%), after a rise of 0.7% in June. However, the total retail sales remained at high levels (even higher than the previous months), and this latest figure is only a monthly result.

As a direct result of COVID’s pressure and the consumers’ loss of confidence, the U.S. stock markets experienced widespread losses, with Tech100 falling by as much as 1.5% during the trading session.

Fed gets involved too

Fed’s Head Jerome Powell said yesterday at a virtual town hall meeting that the U.S. Central Bank is already in the process of putting away its emergency tools of monetary policy. According to some media outlets and analysts, this can be interpreted as the beginning of the tapering process, which could be announced at the September meeting.

Fed’s last Meeting Minutes are scheduled for publishing today, potentially providing new clues about the bank’s monetary policy. Should they confirm a reduction of monetary stimuli, this might boost Treasury Bond Yields and the #USD.

The energy market

Oil is also affected in this scenario of uncertainty due to a likely drop in demand as mobility restrictions appear in more and more countries. Yesterday, oil traded below the critical support level of 66.48, with the reference price reaching 66.50. A daily close below these levels could be the beginning for more significant losses that would direct crude towards the next support levels located around 62.50.

Sources: Bloomberg, reuters.com.

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