Home Business News Fed economic warning leads to sober market mood

Fed economic warning leads to sober market mood

by LLB Editor
11th Jun 20 12:01 pm

A combination of central bank support, the easing of lockdown and hopes of progress towards a coronavirus vaccine have helped support a giddy rally in global stocks in the last two-and-half months with US indices coming close to pre-correction highs.

AJ Bell investment director Russ Mould said, “Last night’s economic projections from the US Federal Reserve hit the markets like a glass of cold water in the face with the sobering assessment from chair Jerome Powell that there will be ‘a long road’ to economic recovery in the wake of the pandemic.

“Investors are forward-looking by nature but they may now be questioning just how far they have to look forward for a tangible recovery in corporate earnings.

“A sell-off which started across the Atlantic overnight continued with a vengeance as markets opened in Europe with the FTSE 100 down 2% and dragged lower by the big oil stocks BP and Shell both falling more than 4% apiece.

“This mirrored significant declines in oil prices with global benchmark Brent just a touch above $40 per barrel. Gold prices were steady and precious metals miners Fresnillo and Polymetal were among the best performers in London, reflecting appetite for traditional safe havens.”

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