Selling pressure continues, as stimulus boost fades

Stocks are back in the red, despite a significant financial package from Australia. Airlines are back in focus as easyJet ground their fleet.

• European stocks in the red again, as oil slumps again

• Airlines need bailouts, which is bad news for Boeing and Airbus

• Stimulus boost likely to fade as Australia releases $130bn financial package

European markets are back in the red today, with an early rebound proving short-lived as traders seek to follow up on Friday's growing pessimism. While Friday's selloff could be put down to a bout of profit-taking, there is a risk that we are on the cusp of a bearish turn as we approach the end of a hugely significant phase of financial support across the globe. From a FTSE 100 perspective, the continued decline in oil prices should be a negative given the heavy commodities focus on the top UK index. However, the relative outperformance for the likes of BP and Royal Dutch Shell highlights the perception that these majors will soon be a good buying opportunity despite the expectation of further short-term weakness in crude.

Airlines are grabbing the headlines for all the wrong reasons, with easyJet the latest to ground their entire fleet in response to the global coronavirus lockdown. If Boeing thought the grounding of all 737 Max planes was bad news, the firm now has to contend with an environment where all of their planes are grounded. Ultimately, we are looking at an environment where almost all airlines will need to be bailed out, and unless that happens, we are looking at a tough time for the likes of Boeing and Airbus as they attempt to sell into a market of low demand and huge supply of second-hand planes.

The global push for stimulus hasn't ended with the US, as the Australians followed up with their very own $130 billion package to help businesses and workers alike. Coming off the back of a period of significant upside for stocks, the question now is whether we can sustain that optimism even once the stimulus packages area known entity. There is a distinct risk that we are now set to refocus on the wider economic impact of the virus, with globalised economies likely to shut down for months at a time. There is no doubt that these stimulus packages have been unprecedented in nature, with the promise to pay wages and cut business costs providing an environment which should minimise the economic fallout. However, with the IMF warning that the forthcoming global recession is likely to be just as bad as 2008, there is no doubt that these financial packages can only go so far when it comes to negating the economic impact of the coronavirus.

Ahead of the open we expect the Dow Jones to open 141 points lower, at 21,496.