ZFX: Uncertainties all around! Stubborn optimism maintained
Asian stocks were mostly down on Friday as the investment sentiment was weak amid the coronavirus outbreaks and the uncertainties regarding the US relief bill. However, European stocks are doing well at the moment, reflecting the adjustment overnight in Wall Street, regaining the losses in the previous session.
Overall, market sentiment is cautious. Traders are reviewing the risks over those issues like the UK-EU talks, the rapid spread of coronavirus, and the progress toward the US stimulus. The dollar strengthened as investors are seeking the haven currency. Dollar index hit 93.9 last night. Countries in Europe are now reimplementing lockdown measures to tackle with the surging coronavirus cases, hurting the sentiment over Sterling and Euro.
On the other hand, the US President Trump suggested a $1.8 trillion package to deal with the Democrats in Congress. But, the suggestion was turned down by Republican Senate Majority Leader Mitch McConnell while House Speaker Pelosi has rejected the offer as well. In general, the market expected there will be no progress in the coming days especially before the US election.
Also, looking back to the UK-EU deal, sentiment was dampened as the EU urged the UK to cede ground in the talks. The UK side has expressed "disappointment" and British Prime Minister Boris Johnson will respond to the talks and show his next step on Friday.
ZFX analyst Jacob Leung said that, we can see the uncertainties all around, like the China-US tension, dragging down the sentiment. However, we can also see the stubborn optimism amid such bearish situation, that implying those markets have not “priced in” the potential “risks”.
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