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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FTSE 100 LIVE: Asian shares have fallen
Britain could be on the brink of an economic and public health disaster if coronavirus lockdown restrictions are lifted too early, a World Health Organisation (WHO) chief has warned.
Dr Mike Ryan, executive director of the WHO’s emergencies program, has issued a stark message to world leaders that lifting restrictions prematurely risks a “vicious cycle” of economic and health problems.
At a press conference in Geneva, Dr Ryan also insisted it is a “false equation” to choose between finances and people’s lives.
He said: “This is what we all fear, is a vicious cycle of public health disaster followed by economic disaster followed by public health disaster followed by economic disaster.
“If you reopen in the presence of a high degree of virus transmission, then that transmission may accelerate.”
3.30pm update: FTSE 100 latest
The FTSE 100 as of 2:45pm was down 205.28 at 5698.77.
2.05pm update: UK warned of vast borrowing
Government borrowing could hit £298.4billion this due to the coronavirus crisis, the Office for Budget Responsibility has stated.
This is an increase from £272.9billion which was predicted last month due to the extension fo the furlough scheme.
1.52pm update: US unemployment numbers rise
US unemployment numbers continued to rise after the country’s Labor Department reported a further 2.981 million people applied for benefits for the week ending May 9.
The week before saw 3.176 million applied for unemployment while the country lost 20.5 million jobs in April.
1.38pm update: France unveils huge package to save tourism
The French government has unveiled a package worth €18billion (£15.9billion) package to help the industry which has been hit hard by the coronavirus outbreak.
Prime Minister Edouard Philippe said: “Tourism is facing what is probably its worst challenge in modern history.
“Because this is one of the crown jewels of the French economy, rescuing it is a national priority.
“This very French pleasure, which is at the heart of our identity, to meet up, eat well and have a chat, has been compromised by the lockdown first, and then the conditions of lifting that lockdown.”
12.50pm update: FTSE 100 continues fall
As of 12.50pm, the stock exchange is 160.49 points down and trading at 5,743.92.
FTSE 100: Rishi Sunak extended the furlough scheme this week
12.42pm update: Public sector borrowing rises
The Office for Budget Responsibility has revealed a public sector borrowing could stand at £298.4billion in a scenario where the lockdown last for three months followed by a three-month period whereby restrictions are lifted.
This figure represents a £25.5billion increase in the previous forecast.
11.32am update: Payment holidays may affect future mortgage applications
Taking a payment on a mortgage or any form of debt may have an effect on future application, research by MoneySavingExprt.com suggests.
Despite promises that credit scores would not be affected, a lender may still factor in the mortgage freeze on future applications.
Martin Lewis, founder of MoneySavingExpert.com, said: “The Financial Conduct Authority has confirmed, sadly, that while credit files shouldn’t be impacted by mortgage or other payment holidays, lenders are still allowed to take them into account when making their acceptance decisions.
“It’s impossible to say yet how widespread this will be or how substantial the impact will be – we’ll start to learn that over the next year. Each lender’s assessment process is different, it’s a dark art that’s hidden from the public and never published, so this is likely to be yet another factor applicants will need to navigate.”
10.32am update: Hong Kong stock index suffers drop
Hong Kong’s, Hang Seng Index finished trading 350.56 points down (1.45 percent) to 23,829.74 points.
10.12am update: FTSE 100 continues
As of 10.03am this morning, the FTSE 100 has fallen by 128.93 points to 5,773.87 (2.2 percent).
9.15am update: Eurozone bond yields fall
Eurozone bond yields continued to fall today as markets continued to fear a second wave.
Due to a rise in outbreaks in China and South Korea, 10-year German bond yields dropped two points.
Italian 10-year bond yields were unchanged at 1.81% after falling 9 basis points on Wednesday.
UniCredit analysts said: “Given that the data calendar remains very light again today, and primary market activity will also be quiet in the euro area, with only Ireland set to sell bonds, we expect eurozone government bond yields to trade broadly sideways.”
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!”
FTSE 100: Steve Mnuchin warned the US economy could be at risk
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 and Bill McLoughlin
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.