What has happened since Friday ?
Euphoria prevailed in today’s trading session in Asia. The Hong Kong and Chinese stock exchanges traded significantly higher, despite new infections with the Covid-19 virus in the USA reaching new record levels in the last few days. This was due to investors’ focus on the economic recovery in China. Over the weekend, the Purchasing Managers’ Index for the service sector was released in China, which showed a significant increase. The index reached a value of 58.4, well above expectations of 53.2. In February the index was still at 26.5, when the second largest economy was in lockdown.
In the USA, daily new infections remain at a very high level. At the weekend, the number of cases on Saturday was 52,000 and on Sunday 42,500. The states in the “Sun Belt”, such as Florida or Arizona, are currently particularly affected.
Some European central bankers also took the floor at the weekend. Christine Lagarde, the President of the European Central Bank, believes that inflation is not a problem for the euro zone for the next two years. She also believes that the pandemic will accelerate the trends towards digitalisation, automation and more sustainable economies. The Governor of the National Bank of France said that the low interest rate policy and bond purchase programmes will continue for the foreseeable future.
The Japanese stock index Nikkei closed today with a significant gain of 1.83%. Futures contracts on the US and European markets are also currently pointing to gains today. The yield on investment grade government bonds for 10-year maturities is 0.69% in the USA and -0.44% in Germany.
Prognoses are no reliable indicator for future performance.