Yesterday's declines were explained by the inability of US lawmakers to find an agreement on the launch of the $2 trillion package of measures to contain the effects of COVID-19. Today it was quite the opposite; there was a strong rally by the stock exchanges in light of the hope that an agreement may be closed between the Democrats and Republicans. The market is in a delicate situation and this is about stabilising the finances of companies and consumers. However, these measures will have little effect if the pandemic is not controlled, that is, if the situation of inactivity extends over time, the damage in certain industries may be permanent. Damages that translate into more unemployment, less consumption, and less growth. Without forgetting the debt problem.
Apart from the political aspect that guides the rise in the markets, the health aspect also contributes its grain of sand since the situation has slightly improved in Italy. This is not the case in Spain, which has seen the number of infected and dead rebound, it must be said that Spain is behind Italy; today's figures for Spain are those of Italy 4/5 days ago. The Italian model is the one that must be followed by the countries that will now experience the expansion of COVID-19.
In the strictly macro aspect we have become aware of activity figures both in Europe and in the United States, through the Markit PMIs. The readings are as detailed below and correspond to the preliminary estimate for March:
- United States Markit Manufacturing PMI: 49.2 previously 50.7
- United States Markit Services PMI: 39.1 previously 49.4
- Eurozone Markit Manufacturing PMI: 44.8 previously 49.2
- Eurozone Markit Services PMI: 28.4 previously 52.6
We expect these figures to deteriorate over the coming weeks. We should see the floor in Europe in April, and possibly also in the United States, depending on the extent to which the pandemic spreads.
