- The eurozone failed to finalize a massive stimulus deal to lift the stock market.
- It applies further pressure on small businesses as major European economies free fall into recession.
- US stock market is at risk of a further downtrend despite coronavirus containment progress in Asia.
The U.S. stock market futures reversed from an initial 1.3% gain to a sharp loss as the eurozone failed to achieve a deal on a stimulus package after grueling hours of discussion.
French finance minister Bruno Le Marie stated:
Major US conglomerates in the likes of Apple have
confirmed that they will not be able to hit their guidance , which may rattle the stock market by the month’s end.
A driving factor of the momentum in the U.S. stock market recovery in recent weeks is the $ 2 trillion Senate stimulus package.
It alleviated significant pressure off of small business owners
during a critical period, allocating hundreds of billions of dollars to assist companies lacking revenues amidst a global pandemic.
The eurozone hoped for a similar stimulus package from its central bank.
As major European economies, including Italy “free fall” deep into recession, businesses and investors anticipated a swift approval of the € (billion deal
to vamp up economic activity in the region and trigger a much-needed stock market recovery.Despite the emphasis on the necessity of a deal to provide a safety net to businesses b y the eurogroup president and euro zone’s chairman of the ministers Mario Centeno, finance ministers failed to reach an agreement.
Ceteno said of the deal:
It is arguably the most sizable and ambitious package ever prepared by the Eurogroup. It builds on unprecedented efforts already take by governments and monetary authorities.
A part of the expectations of investors in the stock market following the $ 2 trillion stimulus deal in the US was that other key economies would follow, especially Europe.
The lack of urgency in restoring business productivity and appetite in the markets by finance ministers in the eurozone is beginning to slow down the newly found momentum of the US stock market.
Prior to the Eurozone meeting, the US stock market was climbing upwards based on the success in Asia in containing coronavirus.
Wuhan, the epicenter of the coronavirus outbreak, (reopened for the first time in 310 days
, demonstrating the confidence of the Chinese authorities that the peak of the virus has passed in China.
There are hopes that the passing of the coronavirus peak in Singapore, China, South Korea, Taiwan, Vietnam, Thailand, and several other Asian countries would (pave the way forward to flatten the coronavirus curve) in the US and Europe in the near-term.
The U.S. surpassed , confirmed coronavirus cases as of April 8, as coronavirus hot spots including New York and California face dire shortages of medical equipment and ventilators. Strategists say that the US stock market recovery will be at risk of a sharp correction if fiscal policies are the sole factor behind the stocks’ rebound.
(This article was edited by
Samburaj Das .
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