European stocks opened higher on Monday, August 17, 2020, influenced by the China’s central bank which has just injected 700 billion Yuan into its financial system pushing oil prices to a five-month high in the hope of a larger demand.
Fueling the economy with 700 billion yuan is truly a significant move to help China’s economy recover from the catastrophic and crippling economic damages caused by the Corona Virus pandemic. The second-largest economy in the world was the first who was able to recover from the first shockwave of the pandemic caused by massive and nation-wide lockdowns. But still, industrial production and retail sales are far from the last year's level.
According to the most possible scenario, the Chinese Yuan will be further strengthened against the USD in the upcoming days.
While in Europe Corona Virus is taking its severe destructive steps towards the economy, new outbreaks in the EU countries are causing concerns for investors and economic activists. The German federal minister for Foreign Affairs, Mr. Heiku Maas, is warning its citizens against traveling to Spain. This will result in a serious blow to both countries' tourism industries. At the same time, France is posting the highest number of new cases over the last three months while Italy closed all its nightclubs in the country once again over legitimate fears of the second wave of coronavirus ravaging the country. As for the United Kingdom, the country added the Netherland and France to its quarantine list last week. The EU and UK together registered 10,000 new cases on Sunday comparing to the US’s mind-numbing number of 42 000.
Market participants are closely monitoring second-quarter earnings which are due to be released this week, specifically the two important American retailers Walmart Inc. (WMT.N) and Home Depot Inc. (HD.N).
The first phase of the U.S. - China trade deal, which was planned over the weekend, has been postponed. The reason both countries stated was for reviewing the implementation of their ‘Phase 1’ trade deal. Chinese purchases of U.S. products have barely totaled half of what was pledged under January’s deal. As a result, Alibaba's shares (ADRs) fell 1.2% in premarket trade, today.