Stocks in the Eurozone, the Euro’s Downtracking Covid, and a German Political Deal
The euro and eurozone stock markets both fell on Wednesday as traders monitored the regional implications from the growing number of Covid cases and awaited news that Germany had formed a new government.
Investors were also looking forward to the minutes of the Federal Reserve’s most recent policy meeting.
As the economy improves and inflation rises, recent market movements signal that the Fed may end its bond-buying program sooner than expected and raise US interest rates next year.
In the meantime, Turkey’s currency remained stuck near all-time lows versus the dollar after President Recep Tayyip Erdogan defended his decision to persuade the central bank to cut interest rates despite rising inflation.
Despite the United States and other countries releasing less crude than projected, oil prices fell.
A recent spike in oil prices has heightened fears that inflation, which is already at multi-year highs, will continue to increase, placing additional pressure on banks to reverse the loose money measures implemented at the start of the pandemic and vital to the stock market’s 18-month rally.
The Reserve Bank of New Zealand raised interest rates for the second month in a row on Wednesday.
“Investors are currently concerned with rising Covid-19 cases in Europe and fears of a faster tapering program in the United States,” said Richard Hunter, head of markets at Interactive Investor.
To combat a comeback of Covid, several European countries have implemented severe containment measures, with Austria resorting to a partial lockdown and some worried that Germany, the continent’s largest economy, could follow suit.
On Wednesday, a center-left coalition of parties was set to announce a pact to form Germany’s next government, placing the Social Democrats (SPD) in power for the first time in 16 years.
The important finance ministry was expected to be led by Christian Lindner, the head of the business-friendly Free Democrats.
After defeating Angela Merkel’s conservative CDU-CSU coalition in a general election two months ago, SPD negotiators are putting the finishing touches on an agreement with the Greens and Free Democrats to install Finance Minister Olaf Scholz as chancellor.
Meanwhile, the European Union’s health agency urged member states to “immediately” implement anti-Covid measures to limit the disease’s potential “extremely high” burden in December and January.
Andrea Ammon, director of the European Centre for Disease Prevention and Control, suggested Covid booster doses for all persons over the age of 18, “with a priority for those over 40.”
In addition, the agency advised countries to boost their overall immunization rates. The Washington Newsday Brief News is a daily newspaper published in Washington, D.C.