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New European Restrictions Shed Recent Gains

In response to spiking Coronavirus cases across Europe, many EU countries are preparing to lockdown in an effort to avoid another wave of the virus. 

Lockdown

The pandemic, which has rattled the European economy and the Euro (EURUSD) along with it, brought nationwide lockdowns across the continent earlier this year. Lifted restrictions possibly allowed for a second Covid outbreak, similar to what was seen in the UK last month. In response, Germany has announced that it will begin partial lockdowns beginning on Monday and France on Friday.

Economies Prepare for Lockdowns

The European Central Bank is set to meet today to discuss if a new economic stimulus will be needed in preparation for a potential new wave.

These announcements are infusing volatility into European shares and index futures, leading them to shed recent gains in reaction to economic uncertainty. At closing yesterday, the following index futures dropped from their October record high:

This is mirroring uncertainty in the US markets, which drove the VIX Volatility Index (VIX) up 13.5% during yesterday’s trading.

Tech Shares Remain Strong

For businesses, technology has become a lifeline that keeps teams connected while offices are closed. Traders have pushed Zoom Video Communications (ZM) to experience an incredible year-to-date growth of 658%. In addition, Microsoft’s (MSFT) share prices jumped 31.6% since January of this year as their Azure cloud technology and suite of services offered a way for teams to continue operating remotely.

More people working from home have assisted in boosting share prices of tech companies who offer digital services and entertainment. This year alone, trading helped Facebook’s (FB) shares rise 29.6%, Amazon’s stock price leaped 68.6% and Netflix (NFLX) climbed 49%. These are just a part of how Nasdaq100 (US-Tech100) futures have pushed +31.6% higher this year.

As lockdowns across Europe prepare to go into effect, traders are preparing for potential continued volatility and keeping a close eye on how governments and markets will react.

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