• Powell rules out negative rates
• US Crude inventories declined for first time in 4 months
Market sentiment worsened even further after Fed Chairman Jerome Powell, emphasized in his speech that the negative effects of coronavirus on the global economy will be severe and may be felt for a long time. "There is a sense, growing sense I think, that the recovery may come more slowly than we would like," Powell said in a webcast, as he pledged to use more of the central bank's power, as needed, to support the economy from the pandemic's hit. Powell also ruled out lowering interest rates into negative territory. Expectations for a quick return to normality, which have recently lifted global stock markets have been suppressed.
"There you have the chairman of the Federal Reserve that has already thrown trillions of dollars at this issue only accentuating his continued concern, that the disaster we've all been fearing is going to happen unless we wake up from this coma," said Kenny Polcari, chief market strategist at Slatestone Wealth LLC in Jupiter, Florida.
US-China tensions increased again after US Republican senator proposed on Tuesday legislation allowing President Trump to impose sanctions on Beijing over its handling of coronavirus pandemic. Also today President Trump wrote on his Twitter that dealing with China is very expensive, maintaining critical rhetoric towards China. He also reiterated that Beijing is responsible for the coronavirus's global pandemic and that even signing another 100 trade agreements will not compensate for the harm done to humanity due to the virus.
The German stock index closed 2.6% lower, while an even stronger sale- off was observed in France, where CAC 40 dropped 2.8%. Solid declines were also seen on the London FTSE 100, which fell by 1.55%.
The sell-off is also visible on the US stock market. Energy, financials and industrials posted some of the steepest percentage losses among the 11 major S&P sectors. During today’s trading session Dow Jones lost 2.24 % S&P 500 fell 2.10 % and Nasdaq is trading 2.26% lower.
WTI crude futures dropped below $26.00 a barrel despite tat EIA report showed lower crude inventories for the first time in nearly four months.
Weekly jobless claims from the US is the main macroeconomic release scheduled for tomorrow that will probably show another rise in unemployment. Investors will also get to know unemployment figures from Australia and manufacturing sales from Canada. Also BOE and BOC governors are scheduled to speak tomorrow.
The New Zealand dollar has weakened today after the RBNZ decision. NZDUSD bounced of major resistance at 0.6154 and is heading towards support at 0.5915. Source: xStation5
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