The European Commission will unveil Wednesday new coronavirus-related stimulus package and expectations are that it could boost markets across Europe.
European Commission President Ursula von der Leyen will present her own proposal Wednesday, building on the Franco-German plan.One example of how this could manifest itself in markets is in government bonds.President of the European Commission Ursula von der Leyen talks to media in the Berlaymont, the EU Commission headquarters.The European Commission will unveil Wednesday a new coronavirus-related stimulus package and expectations are that it could boost markets across Europe.
"As proposed, the new EU recovery fund would mark an important turning point and lead to lower risk premia across the region," analysts at Morgan Stanley said in a note last week, after the Franco-German announcement. Meanwhile in currencies, the euro — the common currency used across 19 European countries — could strengthen on the back of new European stimulus.
Equity markets could also benefit as the upcoming stimulus is expected to support businesses impacted by the virus, as well as help with the digitization and environmental transition.It is uncertain how big the commission's proposed stimulus package will be, but the instrument proposed by Berlin and Paris is so ambitious that analysts believe, if implemented, it would reduce the pressure on the European Central Bank as well as on individual governments.
Market players will be watching the size, composition and conditionality attached to von der Leyen's proposal.
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