2nd wave spooks marts
Optimism on trading floors was shattered Wednesday when Federal Reserve boss Jerome Powell signaled the world’s top economy would take some time to bounce back
Equities and oil sank Friday while the dollar rallied as investors ran for the hills following the worst Wall Street rout since March, fueled by worries about the economic recovery and a second virus wave in the US.
And the magnitude of the financial earthquake caused by the crisis was brought home by data showing the British economy shrank 20.4 percent month-on-month in April.
World markets have blasted higher since hitting a deep trough three months ago, supported by trillions of dollars in government and central bank help and an easing of lockdown measures.
But the optimism on trading floors was shattered Wednesday when Federal Reserve boss Jerome Powell signaled the world’s top economy would take some time to bounce back from the crisis.
Stock barometer Philippine Stock Exchange index recovered on Thursday given risk-on sentiment. The index rose 0.57 percent, or 36.87 points, to 6,476.24 points.
Dose of reality
While Powell’s comments, and the bank’s decision to keep interest rates at near zero for at least two years, was expected, the dose of reality jolted traders.
That coincided with figures showing a spike in new infections in key states including Texas, California, Arizona and Florida, which fanned concerns of a new wave as the nation slowly reopens.
However, Treasury Secretary Steven Mnuchin said there would be no more shutdowns, telling CNBC: “I think we’ve learned that if you shut down the economy, you’re going to create more damage.”
“Investors have been arguing in recent weeks that the stock market performance and economic reality have been disconnected, wondering when reality might hit the market,” said JP Morgan Asset Management strategist Tai Hui.