Thursday Market minute
- Global stocks plummet as the Fed keeps rates unchanged, but paints a grim picture of the United States’ recovery based on containing the coronavirus pandemic.
- Fed President Powell says the FOMC “is not even thinking of raising rates,” and warned that recent consumer and job data suggests the recovery is starting to stall.
- GDP data shows the biggest collapse on record in the three months ending June, and the Commerce Department estimated an annualized contraction of -32.9%.
- Germany’s seasonally adjusted second quarter GDP contacts -10.1%, the worst on record for Europe’s largest economy.
- The dollar recovers from its recent two-year low against a basket of its global peers, but 10-year Treasury yields remain at 0.551% ahead of GDP data and weekly jobless claims, which They are expected to rise to 1.45 million by the end of the week. July 25.
- Tech giants Apple, Facebook, Google and Amazon report quarterly earnings after the close of trade, just a day after facing antitrust questions from lawmakers on Capitol Hill.
- US equity futures suggest a weaker opening on Wall Street ahead of earnings of Eli Lilly, Procter & Gamble, Comcast, UPS, Mastercard and Kellogg before the start of trading.
US stock futures fell lower on Thursday, as the dollar rebounded from its two-year low and gold held near its recent all-time highs, as investors prepared for a crucial series of tech and data gains. economic factors that could underscore the Federal Reserve’s concern about the pace and depth of the nation’s recovery from coronavirus.
Fed President Jerome Powell put the global coronavirus pandemic at the center of his monetary policy framework on Wednesday, and told reporters via video conference in Washington that “he wasn’t even thinking of raising rates. “amid growing signs of slowing job growth and declining consumer confidence.
The actions were further pressured by a Tweet from President Donald Trump, who suggested delaying the 2020 elections after claiming, without evidence, that voting by mail would lead to a fraudulent result.
“The path of the economy will depend significantly on the course of the virus,” the Federal Reserve Committee on Open Markets said on Wednesday, after choosing to keep its key interest rate on hold while Congress debated the next form of stimulus.
Powell said there will be “a need for more support from us and greater fiscal policy” to ensure a full recovery, adding that the United States “has entered a new phase to contain the virus, which is essential to protect both our health and our economy. ”
US GDP contracted at an annualized rate of -32.9% during the second quarter, the Commerce Department estimated, moderately better than the -34.1% forecast, but still the worst reading on record. Consumer spending fell 34.6%, the Commerce Department said, while exports collapsed a staggering 64.1%.
That came as a result of a rise in weekly jobless claims, which rose to 1,434 million, for the week ending July 25, offering further evidence that the recent choroanvirus resurgence is affecting the larger economy. of the world.
That impact appears to last well into the fall months, with cases in the United States rising to 4.51 million and the death toll exceeding 153,000 as of Wednesday night.
With great technological gains from Apple (AAPL) – Get report, Facebook (full board) – Get reportGoogle (GOOGL) – Get report and Amazon (AMZN) – Get report Due to today’s close of business, and a series of weaker-than-expected second-quarter reports from European bluechips like Volkswagen and Royal Dutch Shell, global stocks struggled to find momentum in the overnight session, setting Wall Street to a weakening start the trading session
Futures contracts linked to the Dow Jones Industrial Average suggest a 340-point drop for the benchmark 30-stock index, while the S&P 500, the largest measure of US stocks, is priced at 37 points.
The US Dollar Index, which tracks the dollar against a basket of six global currencies, was modestly higher in the session, but still a short distance from its lowest levels since May 2018 following the moderate Fed statement last night. Yields on 10-year Treasury bonds, meanwhile, fell to 0.551% in European trade.
The weak dollar gave some support to world oil prices, but markets were still in the red on Thursday due to demand concerns, even after the Department of Energy reported the biggest weekly decline in crude stocks. internal, 10.6 million barrels, since December last year.
WTI contracts for September delivery, the US benchmark, were 75 cents lower since its close in New York on Wednesday and were changing hands at $ 40,852 a barrel in early European operations, while Brent’s contracts for September, the global benchmark, saw 68 cents lower at $ 43.08 per barrel.
European stocks were also down, leading to weaker-than-expected gains on the busiest day of the year, with the Stoxx 600 falling 1.7%, Germany’s DAX performance index falling 3%. after the biggest quarterly economic decline – 10.1% – on record. Britain’s FTSE 100 was down 2% at midday in London.
Overnight in Asia, persistent tensions between the US and China kept pressure on regional stocks, which changed little for the session despite gains in South Korea and Australia, with investors rocked by further outbreaks of coronavirus infections in the area, including Hong Kong and Tokyo, where the Nikkei 225 fell 0.26% to close at 22,339.23 points.
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