A man wearing a mask walks by the New York Stock Exchange (Representational Image)  |  Photo Credit: AP, File Image
Key Highlights
- COVID-19 cases seeing a massive uptick in US, Brazil, Germany and India.
- Global health officials express deep concerns over a resurgence in coronavirus infections, but markets don’t seem too perturbed.
Mumbai: The United States is on the brink of a second wave of the novel coronavirus as major cities look to re-close their businesses. The US recorded over 30,000 new infections on Friday and Saturday, which is the highest single-day hike since May 1.
On Sunday, a White House Advisor said that the Trump administration is bucking up for a possible second wave of the pandemic this fall. This, even as 29 states and territories logged an uptick in their weekly-averages of new infections after reopening of the economy in recent weeks.
Hugh Albert Johnson of Hugh Johnson Advisors believes that the second wave is the biggest overhang that is weighing on the US markets. Speaking to ET NOW, he said: “This could lead to a possibility of the second or third shutdown with a deep dive into the economic activity that we expect to see in the coming quarters.”
However, White House Economic Advisor Larry Kudlow dismisses the idea of the resurgence of a second wave in the US. He believes that it is just hot spots that are increasing the overall tally. Expressing confidence in the country’s preparedness to deal with the pandemic, he says that the testing procedures, the diagnostics and the PPE kits are all top-notch and in place.
The surge in COVID-19 cases in US, Brazil and a further outbreak In Germany which is a matter of concern amongst the global health experts, the international markets don’t seem to be facing a brunt or seeming too perturbed. US stock futures giving strong weekly performances and European markets taking a step back, opening with losses, analyzing the surge in infections but gradually recovering.
When posed with a question on how it appears to be a trend where the world markets are indifferent to the fundamental changes in US economy, Hugh Johnson is of the opinion that each economy is now on its own. All of them are adjusting to the advancement of the measures taken by that particular country. “For example, in the US, where the economy is largely driven by leisure and hospitality, it will be majorly affected. Overall, the global economy is headed for a fairly severe contraction and a road to recovery only seems plausible in 2021,” he adds.
Meanwhile, on the issue of US President Donald Trump’s plan to suspend H1-B visas and if that’s a part of his larger election rhetoric, Johnson is of the firm belief that Trump’s every move is driven by the idea solidifying his electoral base.
“Be it the trade deals with economies of the world, like the one with China which focuses on the latter’s agricultural buying from the US, is all done to garner votes from America’s farming community,” he told ET NOW.