Isn’t $900 Billion enough?
The approval of the Covid-19 financial aid package by the North American Congress for an amount of 900 billion Dollars has not been a sufficiently important factor to turn the negative bias of the markets.
Although during a previous period, this stimulus package was the main focus of attention of the markets and could have been the catalyst for an upward movement of the stock markets, the new circumstances regarding the evolution of the pandemic and what is more important, the substantial reduction in the amount of the fund, which at the time was expected to be above 2 trillion Dollars, has made this fiscal stimulus measure less relevant and has remained marginal without a significant impact for markets.
It would be necessary to approve a more significant stimulus in the future, something that is not expected at the moment. Still, everything will depend on the macroeconomic data published in the future, especially the employment figures and GDP growth.
This afternoon, the North American third-quarter GDP is published, and the forecast is for a 33.1% quarter-on-quarter rise. A higher-than-expected figure could help the stock markets to get out of the lethargy in which they find themselves with futures experiencing very slight gains after the sharp fall of yesterday.
In Europe, a good figure for British GDP for the third quarter with a fall of -8.6% year-on-year, less than the expected -9.6%, has not had a significant impact on the market, taking into account recent events with an almost generalized lockdown in the United Kingdom and with the mobility restrictions imposed by the countries of the European Union for trips to the British Isles.
This is already causing supply problems in Britain, and the economic effects of all these harsh measures will be seen in future data releases.
For this reason, the Pound Sterling has continued to fall with losses close to 50 pips against the Dollar.
GBP/USD recovered yesterday part of the territory lost in the initial drop that reached the zone around 1.3200, in a rebound of a technical nature but has not been able to overcome the resistance zone in the short term located around 1.3470.
The evolution of this currency pair will depend to a large extent on the Brexit talks, which at the moment are blocked by the fisheries issue without any news of progress in this regard. The market would see a no-deal as very damaging for the British currency.
European indices are also experiencing small rallies due to technical correction rather than fundamental factors that support it. The situation continues to be highly uncertain on different fronts but mainly on the pandemic's evolution and the more than likely adverse effects of the recently adopted mobility restriction measures.
The German DAX failed to pierce the 13080 support yesterday and is correcting higher from an oversold situation in the short term. In this time frame, we can find a resistance level around 13500, where the 100-hour SMA line passes.