К : Reuters | Singapore/New York |
Published : 14. May 2020 10:29:31
one man will be the first to leave the market on Tuesday, July 11. December 2018, in Tokyo, switch from an electronic exchange board displaying the Japanese Nikkei 225 and another country’s index on the exchange. (Image source: AP photo/Eugene Hoshiko)
Asian stock markets tumbled and Gold reached a weekly high on Thursday as concerns over a second wave of coronavirus infections and a harsh assessment of the Fed President’s return wasted hope for a quick recovery.
The president of the Federal Reserve, Jerome Powell, warned of a long period of weak economic growth, promised to use the power of the U.S. Federal Reserve if necessary, and called for additional tax spending to curb the effects of the pandemic.
There’s a lot of uncertainty and risk in what happens next, Powell said in a webcast speech.
Investors’ concerns were raised by a senior World Health Organization official who said the virus may never disappear.
The widest MSCI index in the Asia-Pacific region, excluding Japan, fell 1%, while Japan’s Nikkei fell about 0.7%.
Futures on US equities fell 0.2% after the worst two-day decline in the S&P 500 index in nearly a month.
The benchmark indices in Australia, Hong Kong, Korea and China fell by about 1%.
We don’t think the market will return to its lows, but it has probably seen its best results, so I expect a correction, said Tony Huntley, Chief Investment Officer of Melbourne-based Adansonia Capital.
The question is, are we going to have a second wave of infection… that would be my biggest fear.
South Korea is facing a new outbreak in Seoul, while China has re-imposed restrictions on traffic near its borders with North Korea and Russia after a new outbreak was discovered in that city.
At night, three major Wall Street indices were closed under the bar for the second day in a row.
Bonds and the Dollar rallied after Powell started talking about the negative outlook for US interest rates and continued to rise on Thursday. The yields of US plain vanilla government bonds have fallen slightly in ten years to 0.6412%.
Oil prices fell despite an unexpected drop in U.S. stocks and gold broke through the $1,700 to reach a weekly high of $1,719.11 an ounce.
Markets are eagerly awaiting the latest economic bulletin from the European Central Bank at 8.00 GMT and the latest data on unemployment claims in the US at 12.30 GMT.
Stock markets became agitated after the April rally when investors and authorities tried to balance the risks of a rapid economic recovery and the financial collapse that led to the blockade, while fearing the outbreak of infection.
We’re going to open up the economy slowly, U.S. Treasury Secretary Stephen Mnuchin told Fox News on Wednesday, as the White House does everything possible to get the economy moving again.
But there is also the risk that we have waited too long, the risk that the US economy collapses and the health effects that entails.
The country’s leading infectious disease specialist, Anthony Fauci, warned that a premature lifting of the blockades could lead to new epidemics.
Caution is also required in Europe and the Antipodes, where restrictions are beginning to ease.
Global markets continue to heal their wounds and while equities remain reliable, earnings are slowing, says Olivier Korber, general currency strategist at the Company.
Unfortunately, the second wave of the pandemic does not pose a flight risk, so the extent of the economic damage could be underestimated, he said, by recommending a long position on the euro/kivi, which has risen by almost 9% this year due to increased market volatility.
Elsewhere, the Australian dollar fell to a weekly low of $0.6420 after the country experienced its largest ever fall in employment.
The rise in the greenback also kept the kiwi below 60 cents at $0.5974, while the EUR and the Pound were under pressure.
Brent Crude Oil fell slightly to $29.06 a barrel and U.S. Crude Oil to $25.36 a barrel.
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