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Worst of coronavirus shutdowns may be over

5 June 2020

Across the world, countries are easing coronavirus lockdown and beginning to return to some sense of normality. With infection rates and death tolls falling steadily across the US, UK, Europe, and Asia, global stock markets are rallying as investors begin to focus on economic recovery.

New COVID-19 Vaccine Hopes Increasing 

Global financial markets continue to react to vaccine hopes as pharma companies race to develop a vaccine for Coronavirus.

Optimism was supported last week by news that US biotech company, Moderna, had found some success with one of the candidate vaccines it has been trialing.

Fast-forward to this week, U.S. biotech company Novavax Inc has joined the race to test coronavirus vaccine candidates on humans and said it was targeting production of over a billion doses of its vaccine candidate next year

"This is one of the largest opportunities or obligations to distribute vaccines globally," Erck said on CNBC.

The results are still at a nascent stage, and the world remains far from the end goal. Any further positive development on the vaccine is likely to encourage market rally. 

Recent economic figures have provided further encouragement that the worst of the negative impact from the virus is behind us with manufacturing PMIs shown to have improved in the US, UK & Europe.

 As more economies have started to open, this has improved the consumer and business sentiment. For example, the German IFO report released last week was better than expectations, indicating that the worst has passed, especially in terms of economic numbers. 

Death Toll Dropping but Risks Remain

The rising tensions between the US and China could become a more persistent headwind for markets, especially after China announced new security measures for Hong Kong on Friday. 

Relations between the world’s two leading economies have been particularly tense over recent weeks amidst escalating US criticism of China over its alleged role in the COVID-19 virus outbreak.

Trump Announced Measures

President Donald Trump has indicated that the United States is working on a strong response to China's planned national security legislation for Hong Kong, which would be announced before the end of the week.

Trump said the US will begin eliminating the special customs and travel exemptions the city enjoys after deciding that the city is “no longer autonomous” from mainland China.

The move will affect “the full range of agreements” the US has with Hong Kong “with few exceptions”, Trump said.

Speaking hours after Trump said the city no longer warranted economic privileges and that some officials could face sanctions, security minister John Lee told reporters that Hong Kong could not be threatened and would push ahead with the new laws.

The economic relationship between the United States and China is likely to remain a focal point among investors in the coming weeks and months.



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