Trump Fails To Reassure ECB Up Next
Indices across Europe have opened sharply lower as Trump fails to calm the markets & WHO announce pandemic
Share this:
Indices across Europe have opened sharply lower on Thursday. The FTSE has plunged 5% and US futures are also pointing a 5% drop when Wall Street opens later in the day.
Risk sentiment was initially hit when the World Health Organization announced on Wednesday that coronavirus is now a global pandemic. Whilst this doesn’t automatically mean any change in policy response, as each country is responsible for their own policy, it does bring an extra layer of fear to the public and the markets.
Risk sentiment was initially hit when the World Health Organization announced on Wednesday that coronavirus is now a global pandemic. Whilst this doesn’t automatically mean any change in policy response, as each country is responsible for their own policy, it does bring an extra layer of fear to the public and the markets.
Trump’s travel ban
Following on from the WHO pandemic announcement, President Trump announced a travel ban from mainland Europe to the US, in addition to a package of measures to support workers and businesses in an attempt to mitigate some of the strains on US the economy. However, there was still no news on the payroll tax cut which needs to make its way through Congress.
Following on from the WHO pandemic announcement, President Trump announced a travel ban from mainland Europe to the US, in addition to a package of measures to support workers and businesses in an attempt to mitigate some of the strains on US the economy. However, there was still no news on the payroll tax cut which needs to make its way through Congress.
Trump’s announcement shows that he is finally taking coronavirus seriously. The bold move on travel will have serious economic implications. Fortunately, he back peddled on including trade and cargo restrictions from Europe too.
Trump’s announcement came following a 50-basis point rate cut from the Federal Reserve last week and another rate cut expected next week.
It also comes following a coordinated approach from the BoE and the UK Government on Wednesday. Even then the FTSE closed the session 1.4% lower.
It also comes following a coordinated approach from the BoE and the UK Government on Wednesday. Even then the FTSE closed the session 1.4% lower.
Improved virus prognoses needed
So far what we are seeing is that a coordinated approach from policy makers at the levels being offered is not calming the markets. Equity indices are trading in bear market territory, down 20% from recent highs. With fear driving these markets it would appear that we aren’t going to see any form of sustained turnaround until the prognosis of the virus improves and infections start declining,
ECB up next
Attention will now turn to the ECB. contrary to the BoE and the Fed has not yet acted to counter the escalating crisis. However, the ECB has significantly less room to manoeuvre given the negative rates and current asset purchase programme.
The broad expectation is that the ECB will take action. The ECB are expected to make a 10-basis point rate cut taking it to -0.6%. They are also expected to increase asset purchases, or bond buying, to €40 billion per month. This will be the first real test for ECB Governor Christine Lagarde and she may have to sacrifice unity among policy makers in order to not underwhelm the market.
However, evidence has shown that big coordinated moves has failed to underpin the market so can a 10 basis point cut by the ECB really do anything? On the other hand, not acting could inject further fear into a very scared market.
Indices across Europe have opened sharply lower on Thursday. The FTSE has plunged 5% and US futures are also pointing a 5% drop when Wall Street opens later in the day.
Risk sentiment was initially hit when the World Health Organization announced on Wednesday that coronavirus is now a global pandemic. Whilst this doesn’t automatically mean any change in policy response, as each country is responsible for their own policy, it does bring an extra layer of fear to the public and the markets.
Risk sentiment was initially hit when the World Health Organization announced on Wednesday that coronavirus is now a global pandemic. Whilst this doesn’t automatically mean any change in policy response, as each country is responsible for their own policy, it does bring an extra layer of fear to the public and the markets.
Trump’s travel ban
Following on from the WHO pandemic announcement, President Trump announced a travel ban from mainland Europe to the US, in addition to a package of measures to support workers and businesses in an attempt to mitigate some of the strains on US the economy. However, there was still no news on the payroll tax cut which needs to make its way through Congress.
Following on from the WHO pandemic announcement, President Trump announced a travel ban from mainland Europe to the US, in addition to a package of measures to support workers and businesses in an attempt to mitigate some of the strains on US the economy. However, there was still no news on the payroll tax cut which needs to make its way through Congress.
Trump’s announcement shows that he is finally taking coronavirus seriously. The bold move on travel will have serious economic implications. Fortunately, he back peddled on including trade and cargo restrictions from Europe too.
Trump’s announcement came following a 50-basis point rate cut from the Federal Reserve last week and another rate cut expected next week.
It also comes following a coordinated approach from the BoE and the UK Government on Wednesday. Even then the FTSE closed the session 1.4% lower.
It also comes following a coordinated approach from the BoE and the UK Government on Wednesday. Even then the FTSE closed the session 1.4% lower.
Improved virus prognoses needed
So far what we are seeing is that a coordinated approach from policy makers at the levels being offered is not calming the markets. Equity indices are trading in bear market territory, down 20% from recent highs. With fear driving these markets it would appear that we aren’t going to see any form of sustained turnaround until the prognosis of the virus improves and infections start declining,
ECB up next
Attention will now turn to the ECB. contrary to the BoE and the Fed has not yet acted to counter the escalating crisis. However, the ECB has significantly less room to manoeuvre given the negative rates and current asset purchase programme.
The broad expectation is that the ECB will take action. The ECB are expected to make a 10-basis point rate cut taking it to -0.6%. They are also expected to increase asset purchases, or bond buying, to €40 billion per month. This will be the first real test for ECB Governor Christine Lagarde and she may have to sacrifice unity among policy makers in order to not underwhelm the market.
However, evidence has shown that big coordinated moves has failed to underpin the market so can a 10 basis point cut by the ECB really do anything? On the other hand, not acting could inject further fear into a very scared market.
Latest market news
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
AUD/USD hammered by US yields and fading RBA hike bets
US yields, dollar strength and fading RBA hike bets have combined to drive AUD/USD to fresh multi-month lows. The macro and technical bias remains bearish, although history suggests parts of the move are now reaching unusually stretched levels.
EUR/USD Forecast: Euro Struggles to Find Support Even After U.S. PCE Data
The euro continues to face a challenging environment in the short term. The currency has struggled to regain ground against a U.S. dollar that remains firmly supported, a dynamic reflected in EUR/USD, which has now recorded three consecutive losing sessions and a decline of roughly 0.6%.
Canadian Dollar Forecast: USD/CAD Four-Week Rally Eyes Yearly Highs 9 30 2026
USD/CAD has advanced in 14 of the past 15 sessions, but stretched momentum raises the stakes as major resistance and NFP come into focus.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.