The Ibex and the rest of Europe fall sharply after the Fed and in fear of a flare-up

Strong falls in the European stock markets this Thursday (Ibex: -3%. 7,431 points) due to the fear of a flare-up of the coronavirus. The cancellation of the hugely popular Coachella and Stagecoach music festivals was announced Wednesday in fear of the Covid-19 being spread. In addition, several US states that were among the first to reopen after the shutdown have reported increases in cases and hospitalizations.

"Investors' worst nightmare comes true with news of a second wave of contagions hitting the US. According to Bloomberg, Florida reported the highest number of new cases in a week and hospitalizations in Texas increased by 6.3%. Meanwhile, the WHO warned that the persistent increase in Latin America is cause for concern, "stresses Ipek Ozkardeskaya, analyst at Swissquote Bank.

All this, after the Federal Reserve (Fed) kept interest rates unchanged on Wednesday and indicated that it does not expect to raise them until 2022. The Fed also said it expects the US economy to contract 6.5% in 2020 before expanding by 5% in 2021.

"We are not thinking about raising rates. We are not even thinking about thinking about increasing rates," said Fed President Jerome Powell. "What we are thinking about is providing support to the economy. We think this is going to take some time," he added.

Today investors will be watching the meeting of the finance ministers of the euro zone, which will discuss the recovery package of the European Union (EU) of 750,000 million and the succession of the presidency of the Eurogroup. Nadia Calviño is among the favorites to occupy this position after the resignation of Mário Centeno.

In the United States there is data on weekly unemployment claims. Experts say the focus will continue to be on whether positive signs of the US job market continue after good data from the employment report released last Friday.

Meanwhile, when it comes to the technical aspect of the Ibex, the correction continues after 'clicking' in its attempt to exceed 8,000 points. "The selective is losing 7,400 points, the lows of the bullish gap of June 3, and a return to the 7,200 point level is not ruled out," explains César Nuez, an analyst at Bolsamanía.