The US $ 2 trillion stimulus plan has been reached, but why are US stocks showing weakness?

China News Agency, Beijing, March 25 (Xie Yiguan) On the morning of the 25th local time, US White House officials and Senate leaders reached an agreement on a $ 2 trillion economic stimulus plan. However, the U.S. stocks fell sharply after opening, swelled from up to down, and performed weakly.

S & P 500 intraday chart.

On March 25, US stocks opened mixed. The S & P 500 index opened down 3.30 points, or 0.13%, to 2444.05 points. The Nasdaq opened 18.50 points, or 0.25%, to 7,939.34 points. The Dow opened up 193.10 points, or 0.93%, to 20897.99 points.

Aviation stocks rose sharply at the start, with Boeing up more than 20% and news that the U.S. government will hold shares in airlines that receive federal funding. In addition, financial stocks opened higher across the board, most US energy stocks opened higher, and large technology stocks opened mixed.

However, the US stock market played a small "roller coaster." After the opening, the three major stock indexes rose rapidly. The Dow rose once to 3%. The Nasdaq and the S & P 500 index turned red and rose more than 2%. Subsequently, it quickly fell, and the three major stock indexes successively fell. At present, the Nasdaq and S & P 500 index fell more than 1%.

On the 24th, the global stock market soared. The U.S. Dow rose 11.37%, the largest single-day increase since 1933. The S & P 500 rose 9.38%, the largest single-day increase since October 2008. The European Stoxx 600 Index closed up 7.5%. , The largest single-day increase since the financial crisis in 2008.

Does the violent rebound of global stock markets mean that the market has bottomed out and is about to usher in the dawn? The global market is always so abrupt, and the risky assets were sold again on the 25th.

On the 25th, Beijing time, after the US emergency stimulus plan was reached, and the liquidity of the US dollar was significantly improved overnight, global risk assets continued to soar in the afternoon. However, before the opening of the US stock market, European stock markets have surged and retreated. Both the British FTSE 100 index and the French CAC40 index have reported no increase of more than 1%, and the German DAX index has turned down, falling more than 1.5%. The previous three indexes rose over 4%.

At the same time, the three major US stock index futures also surged and fell. S & P 500 index futures and Nasdaq futures are currently down more than 1%. At the same time, Brent and WTI crude oil futures have also turned down, and both are now down more than 2%; COMEX gold is lower, and is now down more than 1.6%.

S & P 500 Index Futures Chart.

Daily Fan FX senior analyst David Fan said that the market ’s rally in the past two days may not be the beginning of a round of rally, or a correction after an epic slump, or even just a shock consolidation.

According to estimates by Tom Porcelli, chief U.S. economist at RBC Capital Markets, before the New Crown virus attack, the total U.S. debt reached US $ 21.5 trillion (approximately US $ 413 billion per week). After 2020, the largest annual fiscal expenditure in the United States It will be debt repayment and interest. Assuming that US economic activity has been shut down by 30% due to the outbreak, $ 2 trillion may only last for 16 weeks.

As of 20:00 March 25, Beijing time, the number of confirmed cases in the United States rose to 55,225. World Health Organization spokesman Gerrit Harris said on the 24th that the United States may become the next "epicenter" of the new crown pneumonia epidemic. 85% of the world ’s new cases are from European countries and the United States, of which 40% are from the United States.

US Federal Reserve Bank President St. Louis Brad said in an interview recently that the United States unemployment rate may hit 30% in the second quarter due to the blockade measures against the epidemic, and GDP will drop by 50% unprecedented. According to foreign media reports, former Federal Reserve Chairman Ben Bernanke said that the US economy is expected to experience a "very severe" recession and then rebound "quite fast".

Goldman Sachs believes that there are six conditions that help investors to determine whether the market can bottom out. First, the increase in the number of cases of HIV infection in the United States and Europe has begun to stabilize, and the growth curve has stabilized. Second, the depth of economic disruption and the Predictability of duration; third, global and sufficient economic stimulus; fourth, pressure on financing and liquidity eased; fifth, major assets are severely underestimated and positions are reduced; sixth, other tail risks are not exacerbated. (Finish)