As today is Thursday, we expect data on initial and continuing jobless claims from the United States. Together, these reports provide a good overview of the US labor market. The initial claims should remain under 2 million, while the continuing are expected to have decreased to below 20M.
Just as states are attempting to return back to normal and fundamentals are improving slightly, there are increasing fears of a second wave of the pandemic in the United States. The US now has over 2.2 million cases, with over 300 new test positives today alone. China is also seeing daily increases but they are not as dramatic, at about 30 new Covid-19 infections per day.
Still, China quickly moved to reinstate partial lockdowns in Beijing, where the current outbreaks are. The US government has not said anything about new lockdowns but if the risks to the population increase, a widespread quarantine might be necessary again.
Meanwhile, the economic situation in Europe is improving. The ECB announced more lending programs for banks, which essentially amount to a stimulus of about 550 billion euro. Though some economists feared that the ECB’s recent decision to cut interest rates even lower than they were prior to the pandemic will have a negative effect on the economy, European banks are taking full advantage of it now.
Today there is also a Bank of England policy meeting. The BoE is not expected to cut interest rates today, but a stimulus package of 100 billion pounds is very likely.
Nevertheless, Europe may find itself in trouble for new reasons altogether. For months now there have been efforts to implement an international agreement on how to tax international digital companies. The United States has essentially denied to participate, which means that European countries might alone tax American giants like Amazon and Facebook. Considering Trump’s past responses to taxes have always been tariffs, it is not out of the question to see a trade war between the EU and the US play out.
This development, along with the continuing fears of a second wave of the coronavirus pandemic, are keeping stock indices in check, causing minor losses.
