On Friday, April 24 morning slightly worse sentiment on the global stock exchanges returned. Indices in Europe seemed to lose along with futures contracts in the United States. Just yesterday, the situation worsened after the American company Gilead reported that the result of the trial of the coronavirus drug was inconclusive. Thursday's Financial Times report showed that the drug for COVID-19 is currently unreliable.
Investors counted on a specific agreement during the European Union summit held in the form of video conferences. However, European leaders did not agree on a uniform recovery plan, again there were differences between the north and south of the Old Continent in terms of the size and form of assistance. However, it was agreed to submit the European Commission to reconstruct the next seven-year EU budget, as it will enter into force on 1 January, but it is still the subject of many disputes. The budget is also to include a plan for the reconstruction of the Union. Although no figures are given, officials believe that 1-1.5 billion euros would be needed.
President of the European Commission Ursula von der Leyen said that there is only one instrument that can do such a huge task, namely the European budget linked to the recovery fund. However, we do not know any details about how to obtain such an amount, and the northern European countries are still reluctant to joint bonds because they are afraid of covering losses for other countries.
Meanwhile, in the United States, consideration is underway to help the oil sector, which has suffered from a huge drop in oil prices. US Treasury Secretary Steven Mnuchin is considering support by creating a government loan program for US oil companies. For now, however, there are no details of such a solution, but it may protect many entities from imminent bankruptcy. These types of announcements, together with the expectation of fast action by OPEC+, could recently support oil prices and may help stabilize the situation.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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