Worldwide Coronavirus Toll of May 18, 2020;
Number of Cases: 5,370,893
Mortality Rate: 6.4%
Source: John Hopkins University
Due to Eid al-Fitr in Muslim-majority countries, the Bank Holiday in the United Kingdom and the Memorial Day in the United States this week begins with holidays.
European countries and US states are set to continue gradually remove restrictions in place to contain the coronavirus pandemic and restart their economies. The debates surrounding the lockdown in the UK will be particularly important as the Johnson government tries to remain in charge of the whole crisis now under much stricter scrutiny.
This week will also be relatively calmer in terms of data, with the exception of key figures such as the German Ifo business climate index or Canadian GDP.
EU Rescue Fund
The European Commission will debate this week, the joint Franco-German proposal of a 500-billion-euro coronavirus recovery fund and the multi-annual financial framework (MFF) plans, covering 2021–27. Approval of all 27 EU member states is required for the half-a-trillion-euro aid package to take effect.
The biggest obstacle to the aid fund, for now, is the resistance from a club of four countries, of Austria, Denmark, the Netherlands, and Sweden which argue against the Franco-German plan to award grants to countries heavily damaged by the crisis.
Another key problem to be solved is the levels of the MFF, the fate of the budget rebates received by the above-mentioned four countries, and the balance between grants and loans in the recovery fund. In addition, northern European countries are likely to demand tougher economic reform from those in the south as a condition for any financial help.
Hong Kong and US-China Tension
World stock exchanges will generally focus on the US-China tensions that have started to re-emerge under the shadow of the coronavirus pandemic.
The communist Chinese government’s attempt at bringing Hong Kong under even more control via a national security proposal that critics view as the destruction of the remaining freedoms in the city-state will continue to increase tensions between the US and China.
The other two problems between the two countries are the international operations of technology giant Huawei and the resistance of the self-ruling democratic island of Taiwan to mainland China.
The question of whether Huawei‘s chief financial officer (CFO) Meng Wanzhou will be extradited from Canada to the US will find an answer on Wednesday, a year and a half later. Meng was arrested by Canada and put in detention at her Vancouver home at the end of 2018 at the behest of the US that accuses her of bank fraud and violating sanctions against Iran.
If the Canadian court decides to extradite Meng to the US, the tensions between the US and China will enter a new phase, affecting Canada as well along with world markets.
The re-heating war of words between Washington and Beijing is alarmingly worrying for the markets, despite the Phase 1 trade agreement signed at the beginning of this year, with the fears that the two giant countries’ economies are eventually heading for a point of decoupling and potentially no return.
Monday: United States — Memorial Day, United Kingdom — Bank Holiday, Germany GDP, German Ifo Business Climate Index, New Zealand Trade Balance
Tuesday: GfK German Consumer Climate, US CB Consumer Confidence, US New Home Sales
Wednesday: US Fed’s Beige Book, API Weekly Crude Oil Stock
Thursday: Japan Industrial Production, US Core Durable Goods Orders, US GDP, US Initial Jobless Claims, US Pending Home Sales, US Crude Oil Inventories
Friday: Eurozone CPI, German Retail Sales, Canada GDP