Equities slide, bonds rise on Fed warning of prolonged recession
By David Randall NEW YORK (Reuters) - Stock markets tumbled on Wednesday on fears about a second wave of coronavirus infections and warnings from Federal Reserve Chairman Jerome Powell that the U.S. faces a 'significantly worse' recession than any downturn since World War Two, while bonds rose on a safety bid.
By David Randall
NEW YORK (Reuters) - Stock markets tumbled on Wednesday on fears about a second wave of coronavirus infections and warnings from Federal Reserve Chairman Jerome Powell that the U.S. faces a "significantly worse" recession than any downturn since World War Two, while bonds rose on a safety bid.
Powell's comments came as parts of the global economy are starting to reopen following lockdowns aimed at curbing the spread of the virus, which has pushed unemployment rates to the highest level since the Great Depression of the 1930s. Benchmark equity indexes are up 25% or more from their March lows in anticipation of further government stimulus programs.
"Earnings season is largely behind us and we have entered the phase two of COVID-19 as de-confinement of economies begins, and that is creating a lot of uncertainties on a daily basis, which is weighing on markets," said Francois Savary, chief investment officer at Swiss wealth manager Prime Partners. "We don't think this is the start of a new correction. Markets went too far, too fast and this is the consolidation."
MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 1.59% following broad losses in Europe and Asia.
Wall Street posted a second straight day of steep declines. The Dow Jones Industrial Average <.DJI> fell 516.81 points, or 2.17%, to 23,247.97, the S&P 500 <.SPX> lost 50.12 points, or 1.75%, to 2,820, and the Nasdaq Composite <.IXIC> dropped 139.38 points, or 1.55%, to 8,863.17.
Leading U.S. infectious disease expert Dr. Anthony Fauci on Tuesday warned lawmakers that a premature lifting of lockdowns could lead to new outbreaks of the deadly coronavirus, which has killed 80,000 Americans and brought the country's economy to its knees.
"We now have to see how this reopening plays out, and there are a lot of risks," said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago.
The mood was further soured by proposed legislation by a leading U.S. Republican senator that would authorize President Donald Trump to impose sanctions on China if it fails to give a full account of events leading to the coronavirus outbreak.
Safe-haven assets rose as investors positioned for an extended economic downturn. Benchmark 10-year U.S. Treasury notes
Oil markets, which have plummeted this year due to a combination of a collapse in demand and a supply glut, slid despite expectations of deeper production cuts. U.S. crude
(Reporting by David Randall; Editing by Bernadette Baum and Leslie Adler)
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By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.