The Western markets were unable to shake the day’s losses, finding little to celebrate once trading got underway stateside.
Addressing a webinar organised by the Peterson Institute for International Economics, Federal Reserve chair Jerome Powell expressed his reluctance to implement negative interest rates, stating that they are not something the central bank is looking at (despite Trump’s recent urging that the Fed do exactly that).
If that weren’t enough of a blow to stimulus-hungry US investors, Powell warned that the country is facing a ‘prolonged recession’ that could cause ‘lasting harm’, highlighting that the ‘jobs gains of the past decade’ have been erased in a matter of weeks.
This stark dose of reality, combined with the warning from Dr Anthony Fauci that the US faces ‘serious consequences’ if it reopens its economy too early, has punctured the optimism that had repeatedly lifted the Dow Jones above 24000.
At one point the Dow was down as much as 200 points, before halving those losses. That still leaves it back under 23670, well off Monday’s 24500-crossing May highs.
Fearing a second wave of coronavirus cases in the likes of Germany, the Eurozone remained the worst hit region on Wednesday. The DAX shed 200 points to lurk under 10650, while the CAC dove 2.3% to 4375.
Keeping its losses on the lower end of the spectrum, at least in comparison to losses seen in the rest of Europe, was the FTSE, which fell 55 points, taking it back below 5950. The index’s decline could have been far greater given it was confirmed the UK economy contracted by 2% in Q1; however, the pound has shared some of that burden, falling 0.3% against dollar and euro alike.
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