Sharechat Logo

U.S. Stocks Decline After Powell Virus Warning

Wednesday 4th March 2020

Text too small?

U.S. stocks dropped and Treasuries surged as investors worried the Federal Reserve’s emergency cut won’t be enough to combat the economic impact of the coronavirus.

The S&P 500 headed for its eighth drop in nine days following the Federal Reserve’s 50 basis-point cut of its benchmark rate. Fed chair Jerome Powell said during a press conference that the U.S. economy remains strong but the virus outbreak will weigh on activity “for some time.”

The two-year Treasury yield sunk to 0.72%, while the 10-year plunged below 1% for the first time ever. Banks led losses on equity benchmarks.

“Does a 50 basis point cut change things? That’s a tough one to answer,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale. “Fed cuts tend to be less effective in situations like this when there is a supply and demand shock.”

Investors had piled out of risk assets last week as the spreading virus threatened to derail global growth, only to pour back in Monday in anticipation of concerted action from Group of Seven officials. Oil pared its rebound Tuesday, approaching $46 a barrel, while gold rose. The yen was higher versus the dollar.

The OECD warned that growth will sink to levels not seen in more than a decade and ever more businesses are warning about the impact of the illness.

The governor of the Bank of England, Mark Carney, said it would take all necessary steps to help the economy. Australia lowered its benchmark by a quarter percentage point. Its currency rose, however, underscoring how traders’ expectations have rapidly shifted in recent days.

(Bloomberg)


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

The Reserve bank’s temporary ban affects more than $1b of securities
Yesterday Kathmandu confirmed it was raising $207m in order to cope and help it survive the turbulent Covid -19 pandemic
Rabobank Results
NZ banks not allowed to pay dividends until recovery, RBNZ announces
RBNZ changes affecting ANB Capital Notes
Trading update and completion of big chill acquisition
Turners Maintains FY20 Profit Guidance: Focus on C-19 Plan
Urgent Demand for Medical Equipment Is Making Air Cargo Fees ‘Absolutely Crazy’
J&J and Abbott announce potential coronavirus vaccine and rapid test
A Global Consumer Default Wave Is Just Getting Started in China

IRG See IRG research reports