Summary List Placement
Global stocks slid on Thursday, while the dollar edged up, after the US Federal Reserve gave no indication that any new stimulus measures would be forthcoming, as the economy continues to recover from the effects of the coronavirus pandemic. In its last meeting before US presidential elections in November, the Fed raised its forecasts for US economic growth, inflation and predicted unemployment will shrink faster than it expected three months ago. "The recovery is here, it's well along," Fed Chairman Jerome Powell said at a press conference on Wednesday after the decision to leave US interest rates at 0.25%, as expected. The central bank now expects gross domestic product to shrink by 3.7% this year, an improvement on its last estimate in June of a 6.5% decline. It forecast core consumer inflation will remain below its 2% target, but will average 1.5%, up from 1.0%, while it now expects unemployment to reach 7.6%, compared with its last forecast of 9.3%. And yet, US indices slid broadly, reacting more to the lack of any signal that more fiscal stimulus may be forthcoming. Futures on the S&P 500, the Dow Jones and the Nasdaq 100 fell between 1.0 and 1.4 percent, suggesting a second straight day of declines when the market opens later in the day. The dollar, meanwhile, rose for a third day against a basket of major currencies, to last trade up 0.1% at 93.21, set for its first monthly gain since April. Gold, which tends to move inversely to the dollar, fell by nearly 1% to $1,951 an ounce, set for its largest one-day loss in two weeks. Meanwhile, European shares fell, pushing the Stoxx 50 down by 0.7%, following a widespread decline on Asian equity markets overnight, when the Nikkei dropped 0.7%, the Shanghai Composite fell 0.4% and the Kospi lost 1.2%. Financial markets, and stocks in particular, have profited from trillions of dollars of cheap money that the stimulus programs that the Fed, and other central banks, have implemented this year to shore up the economy, encourage borrowing and consumer spending. The S&P 500 and the Nasdaq have hit record highs this month, fueled largely by the expectation that the Fed will firstly, keep rates low for an extended period of time, and secondly, will keep the option of providing more fiscal support on the table. "Markets always want more," Robert Carnell, regional head of Asia-Pacific research at ING, said. "But, should you keep feeding them?" The Fed signaled it will not raise US rates until at least 2023. "While risk assets might love the intravenous drip of monetary stimulus, it is time to focus on policies that the real economy need … Perhaps the market reaction here is more a realization of this and the fact that any resolution to the current impasse is unlikely until the Presidential election outcome is determined," Carnell said. Indeed, the overall health of the economy has improved rapidly, since witnessing the biggest quarterly contraction on record, between April and June. The number of people out of work has fallen to around 13.5 million from a pandemic high of over 23 million, while various gauges of economic activity, including manufacturing and consumer spending, show recovery is ongoing. "In terms of the overall economy, Chair Powell acknowledged that "the recovery has progressed more quickly than generally expected," but did caution that the recent pace may slow as 'the path ahead remains highly uncertain'," Jim Reid, a research strategist at Deutsche Bank said. "They are essentially projecting the economy to reach Q4 2019 pre-covid levels by the end of 2021," Reid said.Join the conversation about this story » NOW WATCH: A cleaning expert reveals her 3-step method for cleaning your entire home quickly
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Stocks gain, but rising COVID-19 cases and the looming US stimulus vote deadline feed investor jitters
Summary List Placement European shares edged up on Tuesday, defying pressure from a surge in coronavirus...Summary List Placement European shares edged up on Tuesday, defying pressure from a surge in coronavirus cases across the region, while a deadline later in the day for US lawmakers to vote on another round of economic stimulus made investors wary of betting too heavily in one direction or another. The third-quarter earnings season picks up in earnest this week. Swiss investment bank UBS on Tuesday reported a 99% increase in net profit between July and September, driven by a surge in both its trading and wealth management businesses. In Washington DC, Republicans and Democrats remain at odds over the details of another round of measures to help bolster the economy and the chances that the two sides will pass a bill before the November 3 election appear to be dwindling. House Speaker Nancy Pelosi set a deadline for Tuesday to pass a $2.2-trillion Democrat-backed bill. She and Treasury Secretary Steven Mnuchin held multiple talks over the weekend on a deal, but the two sides remain far apart, which stripped over 1.5% off the three major indices. "All in all, a fresh stimulus bill before the elections remains far from certain and we suspect there is not much of it currently being priced in by the markets, which should keep the downside for risk assets relatively limited if prospects of a bipartisan-deal eventually collapse. This should be the main driver for global markets today," ING strategist Chris Turner said. Read More: These are the 10 most crowded trades among global money managers, UBS says. The biggest underweight stocks might surprise you The Stoxx 600 traded almost unchanged on the day, as gains in retail and health care stocks were offset by losses in natural resources and oil and gas stocks. UBS was one of the top gainers among the banking sector, rising by 2.3%. The FTSE 100 gained 0.2% on the day, lifted by the likes of supermarket chain Tesco and clothing retailer Next, while Paris' CAC 40 rose 04% and Frankfurt's DAX slipped 0.3%. The VDAX-New, an index of options volatility on the DAX, rose nearly 2.5%, reflecting growing investor nervousness. Cases of coronavirus are surging in many large European countries. In the UK, the Welsh national government instituted a two-week "circuit-breaker" lockdown across the country, while in Ireland, the government said it would close much of the economy and impose tough restrictions on movement to stem the spread of the disease. With risk aversion rising, the dollar index edged up around 0.1%, mainly driven by losses in the pound, which eased, after the British government dismissed efforts by European Union negotiators to resume negotiations over post-Brexit trade this week. "A bit like the US fiscal stimulus, this is now a political dance. We hope no one stumbles!" Deutsche Bank chief strategist Jim Reid said in a note Tuesday. The pound slipped 0.5% against the dollar to $1.2943 and by 0.1% against the euro to 0.9092 pence. Futures on the S&P 500, the Dow Jones and the Nasdaq 100 were up between 0.4% and 0.8%, suggesting investors may focus instead on earnings later in the day as a more immediate catalyst. Technology firms Netflix and Snapchat, as well as consumer goods producer Procter & Gamble, tobacco group Philip Morris and defense group Lockheed Martin are among those reporting quarterly earnings. In the commodities sector, a slightly stronger dollar ate into demand for the likes of gold, which fell 0.4% to around $1,904 an ounce, but analysts said the price could well stage a bounce back, particularly in the even of a deal on US stimulus. "This evening will apparently determine whether the aid package can be approved before the presidential elections in two weeks' time, so the market will no doubt follow the talks in Washington very closely," Commerzbank said in a note. "Gold could profit in the event of a deal because the US dollar would presumably be in less demand then and would probably depreciate." Meanwhile, the rise in cases of Covid-19 around the world weighed on crude oil. Brent crude futures fell 0.4% to around $42.50 a barrel, while WTI futures fell 0.1% to $41.02 a barrel. Read More: BANK OF AMERICA: Buy these 6 financial-sector stocks that offer the most attractive risk-reward combo as the economy improvesJoin the conversation about this story » NOW WATCH: How the suicide hotline saved my life
European shares lifted by strong corporate results and Chinese retail sales, despite new Covid-19 restrictions across...European shares lifted by strong corporate results and Chinese retail sales, despite new Covid-19 restrictions across EuropeCryptocurrency traders wait for Powell speech 11.08am BST UK household finances remained under severe strain during October, according to the latest survey from IHS Markit. Its household finance index remained at 40.8, far below the 50 mark that divides contraction from expansion. Households have been using up more savings to fund some purchases, Markit said. It uses survey data collected by Ipsos Mori. It is the first consumer survey published each month. 10.59am BST Euronext, the pan-European exchange operator, has halted trading in all its products due to to a technical issue, affecting equities trading in Amsterdam, Brussels, Lisbon and Paris.The outage has hit trading in equities, derivatives and commodity futures across Europe. Continue reading...
UK economy shrank sharply in April; oil prices slide on fears of second Covid-19 wave - business live
GDP posts record fall of 20.4% in April as UK economy suffers total lockdown loss of...GDP posts record fall of 20.4% in April as UK economy suffers total lockdown loss of 25%, one of the worst in the worldUK industrial output, services and construction post record declines 9.22am BST Despite the shocking UK economic data, all of the main UK and European stock markets have now turned positive. 9.20am BST Faced with this unprecedented recession, the Bank of England is expected to add to the £200bn of asset purchases it announced in March, to revive the economy. Economists are forecasting another increase of at least £100bn in the bond-buying programme.Andrew Bailey, the central bank’s governor, said on Wednesday that this downturn is not a “normal recession” and that there will be some long-term damage. If there is any such thing as a normal recession ... this one will be different. There will be elements of a faster recovery, because the first stage of the recovery is literally lifting restrictions and allowing people to go out. And we see ... evidence of elements of that recovery starting.We don’t know how much scarring there will be. I think it is reasonably to say there will be some but it is very hard to judge. Continue reading...