The Japanese Nikkei 225 lost 2.8%, the Broad Topix 2.2% and the Hong Kong Hang Seng Index fell 2%. In mainland China, the Shanghia Stock Exchange lost 0.9%.
Futures from the FTSE 100 suggest that London stocks could drop 1.9% at the opening bell, while the German Dax could lose 2.1%.
The verification of the reality of the markets came after the Federal Reserve forecasts showed a drop in US GDP of 6.5% this year (an election year!). Forecasts of members setting Federal Reserve rates suggested that interest rates would remain close to zero throughout 2022 – a “strong signal” that it believes the effects of the crisis will continue, analysts say of German Bank directed by Jim Reid, responsible for thematic research. He said:
The Fed reiterated that it plans to keep the federal funds rate close to zero until it is satisfied that the economy is on track to achieve the central bank’s dual mandate. […] Powell reinforced this message with the line that they don’t even think about thinking about raising rates.
Despite the crisis, the S&P 500 is still almost at the level it had reached at the start of the year. Normally, this would indicate that the economic outlook is apparently unchanged, a reading which is clearly wrong.
The Fed’s accommodative tone, suggesting that the recovery will continue, initially pushed stocks up last night, but eventually the mood got worse.
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
There could be new doses of reality for investors later when the last initial US unemployment claims arrive, showing how many people thought they needed to claim unemployment benefits.
- 9h BST: Italian industrial production (April)
- 1:30 p.m. CST: first allegations of unemployment in the United States (week of June 6)