Just as markets were starting to recover from a chaotic weekend with contradicting statements regarding US President Trump´s health condition, Trump surprised the markets with a tweet announcing that he decided to halt stimulus talks with the Democrats – Stock Market Analysis Today: Markets rebounding after Trump tweet (announcing halt to stimulus talks).
This triggered a knee-jerk reaction, putting global equity markets under pressure.
Nevertheless, markets bounced back fairly quickly and it is unlikely to be the catalyst for a significant sell-off as most market participants were not anticipating that a deal will be reached ahead of the US presidential election anyway.
However, should there be no stimulus package announced shortly after the election, investors could get increasingly nervous about the economic recovery losing momentum.
Yesterday, shortly before Trump´s tweet, US Federal Reserve Chair Powell warned how important fiscal stimulus will be to prevent the recovery from faltering.
European equity markets are slightly down this morning, with the German index consolidating around 12,900 points.
Markets have been struggling to find a clear direction in recent weeks due to a lack of positive catalysts and a rising number of uncertainties dampening the market mood.
Volatility is only going to increase ahead of the US election day, and the rally is on shaky legs.
Stock Market Analysis Today: Markets rebounding after Trump tweet (announcing halt to stimulus talks)