The Day at a Glance | August 4 2021

The Top

*Economists consider lowering China`s growth estimates due to the Delta variant`s spread in the country.

*ECB will not rush to define the future of emergency liquidity programs because of the pandemic.

*Employment in the US private sector grew less than expected (330 thousand vs. 695 thousand e.).

*Retail sales in Europe increased during June (1.5% m/m; 5% annual).

Economic environment

The virus`s spread raises concerns in China. The virus`s Delta variant has spread rapidly throughout China in the last two weeks and has raised doubts regarding the world`s second largest economy`s recovery. China recorded its highest number of cases since January and the virus has spread to close to half of its 32 provinces in only two weeks. The quick spread has forced authorities to close down tourist sites, suspend cultural events and cancel flights in attempts to slow the virus`s propagation. At least 46 of the country`s cities have advised against unnecessary travels. Economists have started to consider decreasing growth expectations for the second semester of 2021 as the new wave of the virus could affect consumption and consumer confidence. This has reinforced expectations that fiscal and monetary authorities will maintain or increase stimuli to back the recovery. Future decreases to capital requirements for banks are being considered – as well as increasing infrastructure investment on behalf of the government. The new outbreak in China has also triggered pessimism in the oil market as international crude oil prices have receded for three consecutive days due to fears of demand decreasing.