The coronavirus continues to prove a chief problem for the financial markets. Concerns are especially high in the United States, which is the country with the most coronavirus cases in the world. Over the past few days the US has seen increases in the thousands, with around 50,000 new Covid-19 infections registered just in the past three-four days.
Most of the new coronavirus cases come from states that were quick to end their lockdowns, eager to go back to normal. However, at the rate at which numbers are rising, investors fear that a new quarantine will be necessary to contain the disease, which will cause even more economic damage in the future.
The coronavirus is also still spreading rapidly in other countries. Brazil had 40,000 new cases just yesterday, India had almost 16,000, and Russia had 7,400 new infections.
The UK, Spain, Italy, and Germany, which were the most affected parts of Western Europe, are also seeing new cases, though nowhere near the alarming numbers quoted above.
Needless to say, the markets are taking the continued spread of Covid-19 poorly and have turned pessimistic. Risk aversion among investors remains high, which explains the increased interest in safe haven assets. The USD has recovered its recently lost positions, and gold is now chasing the $1,800 level, which will be an eight-year maximum for the precious metal.
Taking into account the current situation, the US government is expected to unveil more stimulus packages and also extend the tax deadline even further as it still deals with record high unemployment. If new lockdowns are necessary, the labor market in the US will be hit even harder.
Stock indices all around the world are incurring losses today due to fears that a second wave of the pandemic will wreak further havoc on the global economy, which is already in a state of recession.
Later today the International Monetary Fund will publish a revision to their expectations for global economic growth, which will likely confirm investors’ pessimistic mood.
