FTSE 100 to start declining sharply after Fed reality test on Wall Street

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Fed Chairman Jerome Powell said it would be “a long way” to economic recovery after the pandemic.

The FTSE 100 should start sharply lower on Thursday, as the US Federal Reserve’s economic projections have called into question the recovery of stocks.In London, the benchmark is called 118 points lower with the CFD and the spreadbetting company IG Markets which price between 6,200 and 6,203.

Wall Street stocks went negative last night. The Dow Jones lost 282 points or 1.04% to 26,989 while the S&P 500 fell 0.5% to close at 3,190. At the same time, the Nasdaq was more robust, increasing by 0.6% at 10,020, and the small cap Russell 2000 fell 2.6% to finish at 1,467.

This happened as the Fed revealed forecasts of a 6.5% contraction in the US economy this year with a two-year recovery, with growth of 2021 and 2022 at 5% and 3.5% respectively .

According to the Fed, the unemployment rate in America will be around 9.3% at the end of this year 2020 before reducing to 6.5% in 2021 and 5.5% in 2022 and 4.1% in 2022.

Fed Chairman Jerome Powell said it would be “a long way” to economic recovery after the pandemic.

“It should be remembered that the unemployment rate before the pandemic was 3.5%, so that one gets a scale of how the job market has been affected by the health emergency,” said David Madden, analyst at CMC Markets. “Economic projections are based on the idea that the recovery will begin in the second half of this year and is expected to last two years.

“Since the Fed has made it clear that it will keep rates close to zero for a few years, US stocks were initially pushed up by the announcement, but the uptrend did not last. ”

Emerging statistics have shown an increase in the number of coronavirus infections, which has fueled fears of a “second wave” – ​​new cases have reportedly increased in Texas and Florida, among other states. The number of cases in the United States has exceeded 2 million.

The US dollar fell to a three-month low before stabilizing.

In Asia, the Japanese Nikkei lost 533 points or 2.29% to 22,593 while the Hong Kong Hang Seng fell 1.74% to 24,613 and the Shanghai Composite fell 0.6% to 2 925.

Around the markets

Pound: US $ 1.2670, down 0.6%

Gold: US $ 1,727 per ounce, down 0.54%

Crude Brent: US $ 40.27 per barrel, down 2.2%

Bitcoin: $ 9,886, up 1.22%

Important events expected on Thursday:

Finals: PLC Group (), (), (), (), (), JLEN Environmental Assets Group Ltd (), (LON: SYNC)

Commercial updates: Fuller, Smith & Turner PLC ()

The FTSE 100 ex-dividends index to push the index down by 5.43 points: (), (), PLC ()

Economic data: weekly unemployment claims in the United States, US PPI

Securities

Fed warns US of “long road” to recovery – BBC News

Global stocks slide over virus fears – Bloomberg

Monsoon Accessorize and Quiz to Close Stores and Cut Jobs – Sky News

Zara owner to close 1,200 fashion stores worldwide – Guardian

Amazon will ban police from using facial recognition software – Guardian

Coronavirus could have huge impact on property markets – BBC News

Subprime Borrowers Resist US Debt Markets – Financial Times

Chinese console market to reach $ 2.15 billion by 2024 – gamesindustry.biz

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