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AFP
London
Stock markets slid around the world on Thursday after the head of the US Federal Reserve warned about the “uncertain” outlook for the virus-hit US economy.
While authorities in numerous countries have been recently upgrading their economic forecasts, central banks are warning that a quick, full recovery is far from assured.
Fed chief Jerome Powell told reporters late Wednesday that although the recovery was looking better than anticipated, “overall activity remains well below its level before the pandemic and the path ahead remains highly uncertain”, and stressed the need for more stimulus.
Meanwhile, if the Bank of England held rates steady it also on Thursday gave its strongest hint yet that negative interest rates could be on the way, saying: “The outlook for the economy remains unusually uncertain.”
For its part the European Central Bank announced it was offering additional temporary relief to banks to help them cope with the impact.
On Wall Street stocks moved sharply lower at the opening bell, though the Dow had recovered most of its losses by late morning. But the S&P 500 and Nasdaq Composite were both solidly in the red.
London finished the day off by 0.5 percent, while Frankfurt shed 0.4 percent and Paris fell 0.7 percent.
Asian equities had mostly dropped following a broadly negative lead from Wall Street on Wednesday.
“A lingering sense of disappointment hangs over global markets in the wake of the Fed meeting,” said IG analyst Chris Beauchamp.
“Investors had evidently hoped for something much more concrete than the relatively vague policy outlook provided by Powell and Co., with equities struggling... and the dollar finding some support.”
While the central bank indicated interest rates were unlikely to begin rising for another three years, allowing businesses to borrow at ultra-low levels, Powell’s call for more fiscal help came as US lawmakers seem unable to find common ground on a new support package.
“It will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of this year,” Powell said. “My sense is that more fiscal support is likely to be needed.”
As if confirmation of that, the latest data on new US jobless claims showed only a slight dip from the previous week, to 860,000 first-time requests for unemployment benefits.
“Economic momentum continues to fade as many Americans continue to file new claims for ... benefits offered to independent contractors and freelancers who do not qualified for regular unemployment benefits,” said Edward Moya, senior market analyst at online currency trading firm Oanda.
Talks on a new rescue bill have been stalled for weeks, with both sides digging in their heels and blaming each other, though Democratic House Speaker Nancy Pelosi and White House chief of staff Mark Meadows each made encouraging statements about the potential to break the impasse.
President Donald Trump on Wednesday tweeted that Republicans -- who last week put forward a $500-billion proposal -- should “go for the much higher numbers”, suggesting he is keen to reach an agreement with Democrats, who are aiming for $2 trillion.
London
Stock markets slid around the world on Thursday after the head of the US Federal Reserve warned about the “uncertain” outlook for the virus-hit US economy.
While authorities in numerous countries have been recently upgrading their economic forecasts, central banks are warning that a quick, full recovery is far from assured.
Fed chief Jerome Powell told reporters late Wednesday that although the recovery was looking better than anticipated, “overall activity remains well below its level before the pandemic and the path ahead remains highly uncertain”, and stressed the need for more stimulus.
Meanwhile, if the Bank of England held rates steady it also on Thursday gave its strongest hint yet that negative interest rates could be on the way, saying: “The outlook for the economy remains unusually uncertain.”
For its part the European Central Bank announced it was offering additional temporary relief to banks to help them cope with the impact.
On Wall Street stocks moved sharply lower at the opening bell, though the Dow had recovered most of its losses by late morning. But the S&P 500 and Nasdaq Composite were both solidly in the red.
London finished the day off by 0.5 percent, while Frankfurt shed 0.4 percent and Paris fell 0.7 percent.
Asian equities had mostly dropped following a broadly negative lead from Wall Street on Wednesday.
“A lingering sense of disappointment hangs over global markets in the wake of the Fed meeting,” said IG analyst Chris Beauchamp.
“Investors had evidently hoped for something much more concrete than the relatively vague policy outlook provided by Powell and Co., with equities struggling... and the dollar finding some support.”
While the central bank indicated interest rates were unlikely to begin rising for another three years, allowing businesses to borrow at ultra-low levels, Powell’s call for more fiscal help came as US lawmakers seem unable to find common ground on a new support package.
“It will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of this year,” Powell said. “My sense is that more fiscal support is likely to be needed.”
As if confirmation of that, the latest data on new US jobless claims showed only a slight dip from the previous week, to 860,000 first-time requests for unemployment benefits.
“Economic momentum continues to fade as many Americans continue to file new claims for ... benefits offered to independent contractors and freelancers who do not qualified for regular unemployment benefits,” said Edward Moya, senior market analyst at online currency trading firm Oanda.
Talks on a new rescue bill have been stalled for weeks, with both sides digging in their heels and blaming each other, though Democratic House Speaker Nancy Pelosi and White House chief of staff Mark Meadows each made encouraging statements about the potential to break the impasse.
President Donald Trump on Wednesday tweeted that Republicans -- who last week put forward a $500-billion proposal -- should “go for the much higher numbers”, suggesting he is keen to reach an agreement with Democrats, who are aiming for $2 trillion.
