FTSE 100 LIVE: Global stocks struggle due to US central bank’s interest rate uncertainty

FTSE 100 LIVE: Global stocks struggle due to US central bank’s interest rate uncertainty

Japan’s Topix was flat while Hong Kong’s Hang Seng and Australia’s S&P/ASX 200 edged higher by 0.2 percent and 0.4 percent. China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks shed 0.2 percent. Overnight, Wall Street’s S&P 500 ended the session 0.7 percent lower while Europe’s Stoxx 600 fell 1.2 percent after weak German trade data raised concerns over the global economy’s recovery from the coronavirus pandemic.

Steve Englander, head of North America macro strategy at Standard Chartered told the FT: “This is dovish, but widely expected.

“Fed chair [Jerome] Powell is similarly expected to reaffirm the downside skew of economic and market risks, the expectation of easy money as far as the eye can see, and the willingness to take policy as far as is needed to generate recovery.”

Futures markets tipped the S&P 500 and FTSE 100 to climb by 0.6 percent when markets in the US and UK open later in the day.

Shares initially surged 19 per cent before paring gains to trade 3 per cent higher. Oil prices fell with international market Brent dropping 1.2 per cent to $40.70 a barrel. US marker West Texas Intermediate slipped 1.4 per cent to $38.38.

FOLLOW OUR LIVE UPDATES HERE:

7.10am update: Coronavirus economic shock set to trigger poverty in poorest countries

Economic shocks caused by the new coronavirus are set to fuel poverty, unrest and instability in heavily-indebted and politically fragile countries for years to come, found an international think-tank on Wednesday.

The pandemic’s impacts will undo years of socio-economic development for some countries, the Institute for Economics and Peace (IEP) said in a briefing released alongside its annual index measuring peace levels around the world.

Steve Killelea, head of the Australia-based IEP, which expects to see most of the peace indicators it measures fall for several years, said: “The worst is still to come.

“The countries which are going to suffer the most are those which are currently fragile because they are the ones which generally have higher levels of food insecurity, the governments are politically less stable and economies are less robust.”

7.06am update: Warning over Australian economy 

Australia’s economy, facing its first recession in 30 years because of the coronavirus, would suffer if Chinese students heeded a warning from their government to stay away because of racist incidents, Australia’s trade minister said on Wednesday.

International education is Australia’s fourth-largest foreign exchange earner, worth A$38 billion ($26 billion) annually, and more critical to the economy than beef or barley, products hit with Chinese import bans and tariffs last month.

China is Australia’s most important trading partner and sends the most international students, accounting for 37.3% of 442,209 overseas students in higher education in 2019, according to Department of Education data.

On Tuesday, China’s Ministry of Education warned students to reconsider returning to Australia, saying there had been a spate of racist incidents targeting Asians during the coronavirus pandemic. It followed a warning last week for Chinese tourists to avoid Australia.

Trade minister Simon Birmingham said: “We would feel the effect – our universities would, if we saw a downturn in international student numbers.”

Birmingham said it would also be a loss for Chinese students and in the long term “would do nothing to help further the mutual understanding between our two nations”.

6.01am update: Asian shares creep higher as markets wait for Fed

Asian stock markets eked out a 10th consecutive session of gains on Wednesday, but momentum ebbed as doubts about the global recovery from the pandemic returned ahead of the US Federal Reserve meeting.

The sideways moves in equities cap two weeks of stock market gains, turbocharged by Friday’s data showing a completely unexpected rise in US employment last month. Safe havens from gold to the Japanese yen won support as optimism ebbed.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent and Japan’s Nikkei rose 0.1 percent. The yen held on to two days of big gains and commodity currencies nursed Tuesday’s losses. Gold rose slightly.

Focus has switched to the Fed’s economic outlook and whether a steepening of the US yield curve during last week’s bond market selloff might prompt intervention at longer tenors.

“The Fed tonight is a key variable in determining whether this is a pit-stop or U-turn,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore.

Published at Wed, 10 Jun 2020 05:01:00 +0000