Unemployment is rising rapidly, governments respond with comprehensive economic aid

Kathrein Opinion // MMM KW14, 30th March 2020

© Adobe Stock
© Adobe Stock
In the end, the international stock markets recorded significant gains last week. The American leading index S&P 500 achieved the strongest weekly rise since March 2009, the Dow Jones the strongest three-day rise since 1931. Until then, the price movements were like a rollercoaster ride. On some days, the Euro STOXX 50 recorded intraday price movements of more than 6 %, while the S&P 500 even recorded up to 10 %.

However, last week's double-digit growth rates, in some cases, could of course only compensate for a small part of the massive price declines since the last highs. With the spread of the Covid 19 virus in the U.S. and further protective measures in the world's largest economy, uncertainty remains high, as does investor nervousness. On the one hand, the extent of the protective measures and their dampening effect on the economy compared with the support packages of governments and central banks and, on the other hand, the cushioning of the increase in budget deficits as a result of the fiscal support measures through expanded bond purchase programs of the central banks (keyword: possible government debt crisis in the future) must be weighed up.
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