- Dow Jones Industrial Average (DJIA) futures point to a roaring stock market open on Thursday.
- Coronavirus cases continue to grow exponentially in the US but Europe points to potential recovery.
- Case numbers retreat in hard-hit Italy, Spain, and Germany with talk now moving to re-opening the economy.
The stock market is poised for a strong bounce on Thursday with Dow Jones Industrial Average (DJIA) futures pushing 2% higher in the premarket session.
America is still ravaged by exponential growth in coronavirus cases , but there is hope in Europe. New covid – cases have peaked and are now declining in the worst-hit nations of Italy, Spain and Germany.
Officials are now beginning to cautiously plan exit-strategies and analysts are plotting economic recovery models. Arnab Das from Invesco said we will ultimately see a ‘square-root-shaped recovery’ when the virus subsides .
I do not think we should expect a kind of sustained, very rapid, very complete V-shaped bounce. I think what we should expect to see maybe is a bit more like a square-root where we have a V-shaped bounce back and things calm down, and gradually recover again. Dow futures leap 2%
The stock market looks set to snap two-straight days of decline as Dow futures contracts
gain 2% overnight. The move higher came despite reports that China’s coronavirus numbers may have been exaggerated .
S&P futures and Nasdaq Composite futures were up 1. (% and 1.) (% respectively.) Coronavirus cases decline in worst-hit regions
The worst appears to be over in the epicentre of Europe’s coronavirus outbreak. Italy and Spain have both reported sustained declines in the number of new cases over the last week. Pinar Keskinocak of the Georgia Institute of Technology said the numbers are promising.
It is encouraging to see the slowdown of the spread in some areas, thanks to strong measures, especially physical distancing.
Infection rates are also slowing in Germany, Netherlands, and Switzerland. As a whole, Europe will likely hit its peak in a matter of days, according to modeling by Global Macro Investor’s head of research Remi Tetot .
although Italy has extended its lockdown, Talks are now turning to safely re-opening the economy. However, that can only be done with widespread testing. Keskinocak explains:
[Nations must be] cautious about relaxing interventions in any area until rapid widespread testing is available, we have a better understanding of who is infected, and who has been infected and recovered.
Will the US follow in Italy’s footsteps?
The decline in Italian cases brings hope to the U.S. which has always been a few weeks behind the European epicenter. Following the Italian trajectory means cases will continue to climb, but should peak soon. Richard Martinello at the Yale School of Medicine explains:
It seems like we’re following the same trajectory that we’ve seen in areas such as Italy. So here we’re anticipating that over the next number of weeks we’re going to see a substantial increase in the number of infected.
Remi Teto’s model would see New York cases peak around April 30 th and then level off. After that, talks could center around re-opening some parts of the economy. A discussion that would inject more optimism into the stock market.
What will the Dow Jones recovery look like?
With a possible end in sight, investors and analysts are scrambling to map out the stock market’s recovery. Arnab Das was confident that the brutal % plunge in US indexes won’t descend into a – style financial crisis.
The central banks are doing everything they can and it seems to be working to keep the financial markets and the financial system operating … We probably won’t have a financial crisis in a systemic sense like 2020 /
But we shouldn’t expect a quick bounce back to normality, he added. Social distancing measures are likely to be lifted in waves, so the stock market should reflect a more gradual recovery.
Eventually what we should have is a recovery. A bit of a bounce back as pent up demand is released. And then over time the economy normalized as a public health crisis comes to an end.
Today, however, all eyes are on the US jobless report. Last week saw a record 3.3 million unemployed claims
. Goldman Sachs predicts today’s numbers could reach 6 million
This article was edited by (Samburaj Das) Now Watch: CCN TV (Read More)
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