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How Trump, protests, and virus will affect the US markets

8 June 2020

As protests and outbreaks of violence sweep across the United States, the economy is only beginning to recover from the new coronavirus pandemic. As if this wasn’t enough, conflict broke out between President Trump and the microblogging platform Twitter, a conflict that may affect other social media giants. Traders, investors, and analysts see opportunities in the developing turmoil, while not expecting any global and long-term market shifts.

Dollar under pressure

Protests in the US dealt a heavy blow to the national currency. The US dollar index once again dropped below 100. Usually, markets and currencies of strong economies aren’t affected by popular protests, even if they partially block the operation of facilities. One example would be the yellow vest protests in France that didn’t affect the euro rate or CAC 40.

However, the current unrest coincided with the coronacrisis and the Fed’s continued policy of generating liquidity at the risk of inflation.

This dynamic helps consolidate other major currencies. For instance, the euro has been rising in relation to the dollar for seven days in a row and shows no signs of a slowdown, while the Australian dollar has recently hit a three-month high.

Trump vs. Twitter

Twitter hides President Donald Trump’s tweets on protests or tags them as fake. President responds with an executive order on “preventing online censorship”. Though experts doubt it can be enforced, the initiative itself can actually affect social media giants. On the one hand, Trump’s decision will provoke increased activity on the microblogging platform, for the company this may mean improved financial indicators. On the other hand, the prospect of investigations and legal action against Twitter have already damaged the platform’s stock price: down 6% within the last week.

Today investors look at alternative securities to invest in, abandoning Twitter until its price returns to $46 per share, which would mean a confident recovery.

Facebook: seize the moment

Despite the protests across dozens of US cities, the country’s economy continues to push ahead. The protests had almost no effect on the stock prices of IT companies, and experts don’t recognize a long-term trend in this setback.

However, Facebook, along with Twitter, has been indirectly affected by the US protests. Facebook’s situation is the opposite, though it also has to do with Trump. The decision of CEO Mark Zuckerberg to do nothing about President’s posts that were tagged and blocked by Twitter caused outrage even among the company’s employees: some took a day off as a sign of protest against the management’s policy. This resulted in 1% drop of the stock price on June 3rd.

If the stock price drops to $225, it would be advisable to seize the moment and buy, as they will still be rising in the long term. After all, in the time of social distancing and online communication, the digital industry supports the operation of coronavirus-hit economies.


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