U.S. equities surged forward on Wednesday, along with European stocks, as investors looked past a worrying increase in virus cases toward the authorities’ monetary stimulus.
The S&P 500 soared during the last session. In Europe, the Stoxx Europe 600 Index also jumped due to increases in real-estate and construction-firm shares. Treasuries were steady, but the U.S. dollar fluctuated.
However, infections rose from China to Brazil over the last few days, and Iran announced that it might need a new lockdown. It seems investors are determined to maintain an optimistic view, though. They prefer to bet on governments not pulling back from gradually reopening businesses due to new virus outbreaks.
Still, Federal Reserve Chairman, Jerome Powell, stated that the U.S. economy has a long way to go before it recovers from the substantial damage done by the pandemic.
Stock markets could remain stretched between a health situation, which probably remains a threat in several regions for some time, and a stream of positive macro figures confirming that the worst is in the past.
According to Xavier Chapard, a global macro strategist at Credit Agricole, the Fed’s priorities are currently shifting from emergency actions preventing a market melt-down to long-lasting measures to support the fastest possible recovery in the economy.
Which countries had an influx of new cases?
China is escalating containment measures in Beijing and canceling flights. Meanwhile, Florida reported record new cases in the U.S. Brazil has also registered a record 34,918 new infections.
Furthermore, Chinese and Indian troops are engaged on their borders. And North Korean plans for troop deployments impacted sentiment in Seoul negatively. Investors are trying to be vigilant due to all these uncertainties.
However, there are some major events to look out for this week. Fed Chair Jerome Powell plans to deliver the second day of the semiannual testimony to Congress later on Wednesday. And the New York Stock Exchange allows a limited number of market makers to return to its trading floor. Additionally, Policy decisions from the Swiss National Bank and the Bank of England are due on Thursday.