Risk on flows in EU
Better treatment for COVID boosts hope
Nikkei -0.56% Dax 0.70%
Asia and the EU
North America Open
USD Building Permits 8:30
Market bulls remained in charge in early European dealing with US stick index and other risk assets higher as concerns over coronavirus began to fade on hopes of more efficacious treatment for most severe cases.
News that Dexamethasone an inexpensive steroid used for a wide variety of ailments has shown statistical promise in reducing death from COVID had the market buoyant at the start of European trade today.
Although globally cases of coronavirus continue to rise the rate of deaths is beginning to decrease as medical professionals around the world find better protocols for treatment. The market may be signaling that it no longer fears the existential threat from COVID even if a vaccine is not developed anytime soon as the virus is now being viewed as a manageable infection rather than a terminal one.
To be sure investors may be far too optimistic in their view that long term effects of COVID will be minimal like the flu. A recent survey of COVID survivors showed that fully 95% have not fully regained their health six months after the infection with 50% stating that they still experienced breathing problems. Still, for now, the general fear of COVID has abated markedly and that continues to drive risk on flows with Nasdaq back above 10,000, oil trading comfortably at $38/bbl, and most risk on FX treading water.
With no major news on the calendar, it remains to be seen how much further the bulls can push price and again it is our view that any significant further gains will only be achieved with additional government largesse. That is why the next story to drive the market will likely be the infrastructure bill proposed by Trump as well as attempts to extend unemployment benefits until December. However, with Republicans putting up opposition to further spending the wrangling in DC could be the catalyst for a correction over the next few weeks.