The rising number of coronavirus infection cases in Europe, China, and the US has reduced the risk appetite in the markets in the new week, increasing the demand for safe havens such as gold, leading to decreases in the world stock markets.
Robert Koch Institute, Germany’s chief medical institution said on Sunday that the reproduction rate of the coronavirus (R0) in Europe’s powerhouse economy has increased from 1.79 to 2.88. European stocks fell on opening. Dax decreased by -0.80% to below 12 200.
A new epidemic cluster emerging in Beijing, the capital of China, and increasing infections in some US states led to increased demand for gold, raising the precious metal to 1758$ per ounce.
US stock futures have overlooked second-wave fears, with the Trump administration insisting that the economy will not shut down again, seeing a 0.8% increase. In Asia, Japanese Nikkei fell 0.2, and MSCI’s largest Asia-Pacific stock index outside Japan remained flat.
EU rescue package
European Union countries continue to discuss differences over the budget and the recovery package aimed at rescuing economies from the Covid19 fallout after their failed meeting last week.
French President Emmanuel Macron, who together with Germany tries to impose the rescue package which includes grants for countries such as Italy and Spain to northern EU countries, on Tuesday meets with the Dutch Prime Minister Mark Rutte. Macron and the Chancellor of Germany Angela Merkel, are trying to break the resistance of the Netherlands, Denmark, and Austria to pass a 750-billion-euros aid package at the EU summit in July.
In Italy, one of the worst-hit by countries the coronavirus, the government is preparing a new spending package worth 15 to 20 billion euros to help its hampered economy from the coronavirus crisis.
According to a statement from a government source in Rome to Reuters, the new package will increase the budget deficit of the Mediterranean country above 11% of GDP.
The source said the new package, which should be approved by parliament, will include additional borrowing and will pull Italy’s public debt from the targeted 155.7% to 157% of the national output.
Pound on the rise
The pound rose on Monday over hopes of a Brexit trade agreement and prospects for better economic data. However, the gains of the GBP against the euro were gone as the British industry order trend continued to decline with -58.
The Sterling traded above +0.50% 1.24 on a daily basis against the US dollar at noon in London, as it was valued around 0.9040 against the euro.