Fed Chair Jerome Powell on Wednesday issued his sober review of an economy slammed by a record pace of job losses and bracing for worse ahead as most U.S. states moved toward reopening following lockdowns aimed at curbing the spread of the virus. Hong Kong’s Hang Seng index futures.HSIc1 slipped 0.92 percent, Australian S&P/ASX 200 futures fell 1.07 percent, while Japan’s Nikkei 225 futures rose 0.05 percent. “We’re picking up from what was a negative session in offshore markets – New York in particular,” said Ray Attrill, head of foreign exchange strategy for National Australia Bank in Sydney.
A pushback against Powell’s “downbeat assessments” about U.S. economic risks and his rejection of the idea of using negative interest rates as a tool for economic recovery “will spill into the Asia session,” Attrill said.
Wall Street’s three major indexes closed lower for the second day in a row, the Dow Jones Industrial Average fell 2.17 percent, the S&P 500 lost 1.75 percent, and the Nasdaq Composite dropped or 1.55.
Still, Powell downplayed of the idea of using negative interest rates pushed the U.S. dollar higher against a basket of currencies.
The US Dollar Currency Index, which measures the greenback’s strength against six major currencies, was up 0.23 percent.
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8.49am update: Shanghai Composite Index drops
The Shanghai Stock Exchange has finished 0.96 percent down today.
The market finished at 2,870.34, down 27.71 points in trading.
8.11am update: FTSE 1100 drops
The FTSE 100 has begun trading today at 5,828.31, 79.54 points down (1.28 percent) at the time of writing.
7.21am update: Donald Trump warns trade deals can’t outweigh COVID-19
In a tweet, the US President said the benefits from the trade deal with China were outweighed by what he termed as the “plague from China”.
He said: “As I have said for a long time, dealing with China is a very expensive thing to do.
“We just made a great Trade Deal, the ink was barely dry, and the World was hit by the Plague from China.
“100 Trade Deals wouldn’t make up the difference – and all those innocent lives lost!”
7.09am update: “Risk to US economy of reopening too slowly”
Steve Mnuchin, the US Treasury Secretary has said the economy will be reopened slowly but warned taking too long will risk severe economic damage.
Mr Mnuchin said: “We’re going to slowly open the economy.
“But there is also a risk that we wait too long, there is a risk of destroying the US economy and the health impact that that creates.”
Additional reporting by Rachel Russell.
6.19am update: Fed’s Powell shows no love for negative rates
Federal Reserve Chair Jerome Powell had a clear message to interest rate futures traders on Wednesday: Bets that the U.S. central bank will pursue a negative interest-rate policy are off-base.
The Fed’s top official became the latest in a parade of policymakers to brush off the notion that they might push rates into negative territory after futures tied to Fed interest rate policy expectations recently began pricing a small chance of sub-zero U.S. rates within the next year.
“The committee’s view on negative rates really has not changed. This is not something that we are looking at,” Powell said in answer to a question during an event hosted by the Peterson Institute for International Economics, as he referenced the Fed’s policy-setting Federal Open Market Committee (FOMC).
A number of major central banks – including the Bank of Japan and European Central Bank – have implemented negative-rate policies in the years since the 2007-2009 financial crisis because their sluggish economies have failed to produce the desired level of inflation.
Published at Thu, 14 May 2020 04:57:00 +0000