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Euro Riding On Fiscal Unity Optimism, Stock Markets Plunge As New COVID-19 Infections

European stocks declined for a second consecutive day over fresh COVID-19 concerns as efforts to contain the virus appear to have hit a wall. Despite growing virus concerns, the European unity seems to offer some optimism as recent milestone rescue package led by France and Germany brings the bloc near fiscal integration.

Renewed hope for the Euro

The Euro has had critics who thought that without fiscal unity the monetary union was to be rendered dysfunctional. The newfound unity is already warming hearts of investors and has led rallies ranging from Germany stocks, Italian bonds, and to the Euro.

According to Plurimi Wealth LLP chief investment officer Patrick Armstrong, the France-German package removes any fragility that might have been there in the Eurozone. Armstrong who was skeptical about the Euro has changed tone and is now bullish and expects that currency to strengthen to $1.20 by the end of this year.

Meanwhile, concerns of the second wave of infections across Europe saw stock markets plunge. The Stoxx Europe 600 Index dropped 0.3% with lending, and travel and leisure leading the plunge. Spain’s IBEX35 dropped 1.7% as concerns of another outbreak led the UK government to impose restrictions on travelers coming back from the country.

Indian stocks plunge as coronavirus concerns grow

In India, stocks plunged as concerns grow due to the rising number of COVID-19 cases leading to some investors questioning the recent global markets rally from the March lows. For instance, the S&P BSE Sensex declined 0.6% on Monday although the benchmark is still up over 45% since the March selloff. This is despite India being the third most affected country in terms of coronavirus infections. Indicators are showing that the rebound could have been overdone.

Citigroup analysts Surendra Goyal indicates that the risk-reward is uninspiring and maintained his March target price for NSE Nifty at 10,500. This prediction is almost 6% from the current price at 11,148.70 with the analyst indicating that it is hard to make an argument around the liquidity/flows. Currently, the number of infections in India is at 1.39 million with mortalities estimated to be over 32,000.

Ruchi Gupta

Ruchi Gupta covers various beats from finance to technology and from lifestyle to hobbies. She has an MBA in Finance. Ruchi enjoys writing on celebrities and political news. She likes traveling and exploring places.

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