The market has started the week with a mixed sentiment…
Emergency in Japan as coronavirus spreads
Instruments to trade: USD/JPY, CAD/JPY, AUD/JPY
Coronavirus pushes to recession countries one by one. This time it gets to Japan, known as one of the world’s hardest working nation.
Soft lockdown in Japan
As coronavirus cases surged in the country, Prime Minister Shinzo Abe declared the state of emergency in the largest population centers that make up almost 50% of GDP, according to Bloomberg.
In fact, the lockdown isn’t as strict in Japan as in other countries today, it’s just a request to stay at home and close businesses, not an order. So, perhaps the downturn of economic activity won’t be so extreme. However, according to Japan economists, people will take it seriously this time.
Moreover, Japan Prime Minister will rescue the country’s economy by almost 1 trillion US dollars stimulus package equal to 20% of Japan's economic output. It’s more than double the amount Japan spent following the crisis in 2008.
Many economists believe that Japan has already fallen into recession because of export declines, supply-chain disruptions and travel bans. There are fears that economy is going to shrink close to 20% in a lockdown.
As we could notice, if coronavirus cases rise, the stock market volatility rises too. As a result, Japanese yen may lose its safe-heaven status.
The market sentiment switched to risk-off after the Fed’s Powell statement. The USD edged higher, while risker assets started falling after reaching quite high levels. Let’s have a closer look.
The market sentiment is mixed as investors are weighing on additional government support measures amid increasing virus cases throughout the world.
Follow the report on August 14 at 15:30 MT time!
The market sentiment switched to risk-on. The US dollar is dipping down, while riskier assets are rising, especially the Australian dollar after the positive employment data. All eyes on US unemployment claims.
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