LONDON, Sept 17 — Europe’s stock markets sank today, taking their cue from earlier losses in Asia after the head of the US Federal Reserve warned about the “uncertain” outlook for the virus-hit US economy.
The European Central Bank announced it was offering additional temporary relief to banks to help them cope with the impact of the coronavirus pandemic, easing requirements on the capital they are required to hold.
In late morning deals, London’s benchmark FTSE 100 index of major blue-chip companies shed 0.9 per cent as investors awaited the Bank of England’s latest monetary policy decision at 1100 GMT, when it is expected to maintain its key interest rate at 0.1 per cent.
Heading into the half-way stage in the eurozone, Frankfurt’s DAX 30 shares index dipped 0.6 per cent and the Paris CAC 40 lost 0.7 per cent.
The dollar steadied after losing ground following the Fed’s comments, while oil prices retreated as traders awaited a video conference meeting of the expanded Opec+ grouping of crude producing nations.
“A lingering sense of disappointment hangs over global markets in the wake of the Fed meeting,” said IG analyst Chris Beauchamp.
“Investors had evidently hoped for something much more concrete than the relatively vague policy outlook provided by Powell and Co., with equities struggling... and the dollar finding some support.”
Asian equities had mostly dropped following a broadly negative lead from Wall Street on Wednesday.
Fed chief Jerome Powell told reporters that while the recovery was looking better than anticipated, “overall activity remains well below its level before the pandemic and the path ahead remains highly uncertain”, and stressed the need for more stimulus.
While the central bank indicated interest rates were unlikely to begin rising for another three years, allowing businesses to borrow at ultra-low levels, Powell’s call for more fiscal help came as US lawmakers seem unable to find common ground on a new package.
“It will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of this year,” Powell said. “My sense is that more fiscal support is likely to be needed.”
Talks on a new rescue bill have stalled for weeks, with both sides digging in their heels and blaming each other, though Democratic House Speaker Nancy Pelosi and White House chief of staff Mark Meadows each made encouraging statements about the potential to break the impasse.
President Donald Trump on Wednesday tweeted that Republicans—who last week put forward a US$500-billion proposal—should “go for the much higher numbers”, suggesting he is keen to reach an agreement with Democrats, who are aiming for US$2 trillion.
Oil prices dropped, a day after chalking up big gains of more than four per cent.
Key figures around 1000 GMT
London — FTSE 100: DOWN 0.9 per cent at 6,022.32 points
Frankfurt — DAX 30: DOWN 0.6 per cent at 13,174.99
Paris — CAC 40: DOWN 0.7 per cent at 5,040.19
EURO STOXX 50: DOWN 0.9 per cent at 3,310.40
Tokyo — Nikkei 225: DOWN 0.7 per cent at 23,319.37 (close)
Hong Kong — Hang Seng: DOWN 1.6 per cent at 24,340.85 (close)
Shanghai — Composite: DOWN 0.4 per cent at 3,270.43 (close)
New York — Dow Jones: UP 0.1 per cent at 28,032.38 (close)
Euro/dollar: DOWN at US$1.1808 from US$1.1816 at 2100 GMT
Pound/dollar: UP at US$1.2968 from US$1.2967
Euro/pound: DOWN at 91.01 pence from 91.12 pence
Dollar/yen: DOWN at 104.70 yen from 104.95 yen
West Texas Intermediate: DOWN 0.6 per cent at US$39.92 per barrel
Brent North Sea crude: DOWN 0.5 per cent at US$41.99 per barrel — AFP
