The market rebound petered out on Wednesday afternoon, investors struggling to justify the gains in the face of the latest coronavirus news.
Probably the most relevant headline came from Chinese government economist Zhang Ming, who warned that the country’s first quarter growth may fall under 5% as the virus spreads, with the forecast based on a mid-February peak for the outbreak. Given investors freaked out as China’s GDP dropped to 6.0%, a reading more than 1% under that is a potential nightmare.
The Western indices avoided repeating Monday’s losses; however, the session’s gains couldn’t help but dissipate. The FTSE found itself back below 7500 as it slipped 0.2%, while the DAX erased its growth to sit unchanged on the day at 13300. The Dow Jones eked out a 30 point climb, but that was well short of the 200 point-plus rise it had seen just after the US open.
This evening sees the first Fed statement of 2020, and after last year’s rate-cutting antics, it could be a quiet one. Still, the central bank has been known to pivot in recent times, so investors will likely be hanging on Jerome Powell’s every word.
More dramatic, no doubt, will be Thursday’s Bank of England outing. Not only is it Mark Carney’s final meeting as governor, but it could bring about a rate-cut – the prospect of which has driven the pound lower in the last week. The big question is whether or not the decision will come under Carney, or his successor Andrew Bailey.
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