Left Menu
Development News Edition

GLOBAL MARKETS-Stocks falter as Fed fails to offer fresh cause for cheer

European stocks are expected to follow suit, with the futures for the bellwether Euro Stoxx 50 index trading 0.96% lower in early trade. MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.01%, running out of steam after five straight days of gains.

Reuters | Washington DC | Updated: 17-09-2020 11:52 IST | Created: 17-09-2020 11:45 IST
GLOBAL MARKETS-Stocks falter as Fed fails to offer fresh cause for cheer
Representative Image Image Credit: Pixabay

Stocks fell and the dollar advanced on Thursday after the Federal Reserve pledged to keep interest rates low for a long time but stopped short of offering further stimulus to shore up a battered U.S. economy. European stocks are expected to follow suit, with the futures for the bellwether Euro Stoxx 50 index trading 0.96% lower in early trade.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.01%, running out of steam after five straight days of gains. Japan's Nikkei shed 0.63%. U.S. S&P 500 futures fell 1.03% in Asia on Thursday following a 0.46% drop in the S&P 500 on Wall Street.

Tech shares fared worse, with the Nasdaq Composite dropping 1.25% on Wednesday. Nasdaq futures fell by 1.14% in Asia. "In essence, high-tech shares were overbought and we've seen a correction since early this month," said Soichiro Monji, chief strategist at Nishimura Securities in Kyoto. "I think that is still continuing, with the Fed just being a fresh trigger."

The Fed said it would keep interest rates near zero until inflation is on track to "moderately exceed" the central bank's 2% inflation target "for some time." New economic projections released with the policy statement showed most policymakers see interest rates on hold through to at least 2023, with inflation not breaching 2% over that period.

"Of course, sensible people wouldn't really hold anyone to macro forecasts that far out so we'll cross that bridge when we get to it," said Derek Holt, head of capital markets economics at Scotiabank in Toronto. "Nevertheless, markets are priced for basically one outcome here and that is little inflation and no hikes for years to come."

Still, with such expectations considered a foregone conclusion by many investors, there was some disappointment in the market. "By and large the Fed delivered the minimum of what had been expected by markets with a key focus on the implications of a move to 'flexible' inflation targeting," said Stephen Miller, investment strategist at GSFM in Sydney.

The 10-year U.S. Treasuries yielded 0.677%, a few basis points above its levels before the Fed. The U.S. dollar gained against most other currencies.

The euro dropped 0.4% to $1.1767 while the Australian dollar lost 0.4% to $0.7278, having erased earlier gains made after stronger-than-expected local jobs data. The Chinese yuan also dropped about 0.35% to 6.7686 per dollar, stepping back from a 16-month high hit on Wednesday.

The yen was little moved at 104.98 to the dollar having hit a 1-1/2-month high of 104.80 per dollar overnight. With a focus on new Prime Minister Yoshihide Suga, who is seen by some as a strong opponent of a higher yen, some traders said the market may be tempted to test his resolve on the currency.

"One interesting speculative trade in the near-term will be to long the yen ahead of the coming long weekend in Japan," said a senior trading manager at a major Japanese bank. The Bank of Japan maintained its policy as widely expected.

As the dollar gains, oil prices gave up some of their big gains made on Wednesday on a drawdown in U.S. crude and gasoline inventories, with Hurricane Sally forcing a swath of U.S. offshore production to shut. Brent crude dropped 0.99% to $41.80 per barrel while U.S. crude fell 1.2% to $39.68 per barrel.

Gold also slipped 0.8% to $1,943.8 per ounce.


TRENDING

OPINION / BLOG / INTERVIEW

Post-COVID-19 Nigeria needs a robust Health Management Information System to handle high disease burden

Nigeria is among a few countries that conceptualised a health management information system HMIS in the early 90s but implementation has been a challenge till date. Besides COVID-19, the country has a huge burden of communicable and non-com...

Morocco COVID-19 response: A fragile health system and the deteriorating situation

Learning from its European neighbors, Morocco imposed drastic measures from the initial stages of the COVID-19 outbreak to try to contain its spread. The strategy worked for a few months but the cases have surged after mid-June. In this sit...

COVID-19: Argentina’s health system inefficiencies exaggerate flaws of health information system

You can recover from a drop in the GDP, but you cant recover from death, was the straightforward mindset of Argentinas President Alberto Fernndez and defined the countrys response to COVID-19. The South American nation imposed a strict...

Rwanda’s COVID-19 response commendable but health information system needs improvement

Rwanda is consistently working to improve its health information system from many years. However, it is primarily dependent on the collection and reporting of health data on a monthly basis. Besides, evaluation studies on Rwandas HIS publis...

Videos

Latest News

Euro zone bond yields dip as concern grows over second COVID wave

High-grade euro zone government bond yields fell across the board on Thursday on bets that the European Central Bank will keep the stimulus taps flowing as worries grow over the economic impact of a second wave of COVID-19 infections.With a...

Fortunate to be preparing for Olympics in safe environment, says Vandana Katariya

Experienced striker Vandana Katariya has been extremely satisfied with the progress of the Indian womens hockey side since the team resumed sports activities last month. The forward, who has played over 200 matches and scored 64 goals for t...

Myanmar’s ‘maximum containment’ COVID plan pushed to brink as virus surges

Myanmar has quarantined tens of thousands of people to prevent a coronavirus outbreak from overwhelming its fragile healthcare system but public health experts and doctors say the strategy is on the brink of collapse as infections surge.The...

London stocks fall as weak earnings weigh; Cineworld slumps

UK shares dropped on Thursday as fresh pandemic curbs threatened to derail a rebound in economic activity, while cinema operator Cineworld tumbled after warning it may need to raise funds to weather the crisis. The FTSE 100 index fell 0.9, ...

Give Feedback