Equities slide, bonds rise on Fed warning of prolonged recession

NEW YORK (Reuters) – Stock markets tumbled on Wednesday on fears a couple of second wave of coronavirus infections and warnings from Federal Reserve Chairman Jerome Powell that the U.S. faces a “significantly worse” recession than any downturn since World War Two, whereas bonds rose on a security bid.

FILE PHOTO: The Wall Street signal is pictured on the New York Stock change (NYSE) within the Manhattan borough of New York City, New York, U.S., March 9, 2020. REUTERS/Carlo Allegri

Powell’s feedback got here as components of the worldwide economic system are beginning to reopen following lockdowns aimed toward curbing the unfold of the virus, which has pushed unemployment charges to the very best degree because the Great Depression of the 1930s. Benchmark fairness indexes are up 25% or extra from their March lows in anticipation of additional authorities stimulus applications.

“Earnings season is largely behind us and we have entered the phase two of COVID-19 as de-confinement of economies begins, and that is creating a lot of uncertainties on a daily basis, which is weighing on markets,” stated Francois Savary, chief funding officer at Swiss wealth supervisor Prime Partners. “We don’t think this is the start of a new correction. Markets went too far, too fast and this is the consolidation.”

MSCI’s gauge of shares throughout the globe shed 1.59% following broad losses in Europe and Asia.

Wall Street posted a second straight day of steep declines. The Dow Jones Industrial Average fell 516.81 factors, or 2.17%, to 23,247.97, the S&P 500 misplaced 50.12 factors, or 1.75%, to 2,820, and the Nasdaq Composite dropped 139.38 factors, or 1.55%, to eight,863.17.

Leading U.S. infectious illness professional Dr. Anthony Fauci on Tuesday warned lawmakers untimely lifting of lockdowns might result in new outbreaks of the lethal coronavirus, which has killed 80,000 Americans and introduced the nation’s economic system to its knees.

“We now have to see how this reopening plays out, and there are a lot of risks,” stated Jack Ablin, chief funding officer at Cresset Capital Management in Chicago.

The temper was additional soured by proposed laws by a number one U.S. Republican senator that might authorize President Donald Trump to impose sanctions on China if it fails to provide a full account of occasions resulting in the coronavirus outbreak.

Safe-haven property rose as traders positioned for an prolonged financial downturn. Benchmark 10-year U.S. Treasury notes final rose 13/32 in worth to yield zero.6492%, from zero.692% late on Tuesday. The greenback index rose zero.19%, with the euro down zero.28% to $1.0816.

Oil markets, which have plummeted this yr on account of a mix of a collapse in demand and a provide glut, slid regardless of expectations of deeper manufacturing cuts. U.S. crude slipped 1.28% to $25.45 per barrel, and Brent was at $29.20, down 2.6% on the day.

Reporting by David Randall; Editing by Bernadette Baum and Leslie Adler

Our Standards:The Thomson Reuters Trust Principles.

Source link reuters.com

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