The stock markets found new impetus on Thursday in the credit surge announced by the United States Federal Reserve (Fed). It is a real blessing for investors before the Easter weekend break. However, they continue to remain on the alert pending the outcome of the oil meetings.
Stock markets on the rise
Wall Street was therefore galvanized by new announcements from the Fed, which deployed heavy artillery to save the world's leading economy: the Dow Jones rose by 1.22% and the Nasdaq by 0.77%. European stock markets also all ended up sharply, consistently reducing losses related to the Covid-19 epidemic. Frankfurt (+ 2.24%) gained almost 11% over the whole of this shortened week, to reduce its loss since January to 20%. At the close, Paris recorded + 1.44%, London + 2.15%, Madrid + 1.71% and Milan + 1.39%.
In total, the Federal Reserve will grant $ 2.3 trillion in new loans, intended especially for businesses and local communities hit by the pandemic. "All of these additional stimuli have helped to overshadow the fact that there is little short-term likelihood of containment measures being lifted" as the pandemic continues to move forward and persecute the economy, says Michael Hewson, analyst at CMC Markets.
New proof of the economic disaster, the United States recorded 6.6 million new unemployment benefit claimants in one week. Its neighbor, Canada recorded an unemployment rate of 7.8% in March, 2.2 points higher than in February, the largest monthly increase since 1976. Thus, "the recent rebound could be just as short-lived as those observed in the past, ”estimates OFI Asset Management, in a note.
Caution is therefore called for, all the more so since market experts consider that the rebound is not justified in view of the fundamentals, the economy being paralyzed by quasi-planetary containment measures and that the outlook darkens for 2020 They also fear the next step, that of the publication of company prospects and results or an increase in new cases of contamination, prolongation of confinement or insufficient effectiveness of measures to save jobs and household incomes, especially the most modest.
The 1929 crisis in everyone's mind
Before being absent for three to four days, depending on the continent, for Easter, investors were mainly watching the outcome of the meeting of the main oil producing countries, those of OPEC in mind, who are discussing a massive reduction of production, their main weapon in the face of falling demand. On this point, Donald Trump seemed confident. "They are close to an agreement, we will soon know what it is," said the American president.
But surely it will take more for investors to look to the future with confidence. The International Monetary Fund estimates that the coronavirus could have worldwide "the worst economic consequences since the Great Depression" of 1929. According to the IMF, more than 170 countries, out of 189 member countries, will experience a contraction in their income by inhabitant.
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Why are the world's stock markets panicking with oil?
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- Opep
- United States
- Coronavirus
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- Economic crisis