After Wall Street digested hours of congressional testimony from the Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary Steven Mnuchin and parsed earnings reports from major retailers, including Dow components Walmart and Home Depot, US stocks closed the day lower on Tuesday, losing its steam in the final hours of trading due to a report from Boston Globe Media STAT news service that seemed to cast doubt on Moderna’s coronavirus vaccine candidate. In a nutshell the markets are simply bracing for potential protracted economic recovery. The Dow Jones Industrial Average DJIA, -1.58% fell 390.51 points, or 1.6%, to end at 24,206.86, near a session low, while the S&P 500 index SPX, -1.04% shed 30.97 points, or 1.1%, to finish at 2,922.94.
The UK Chancellor, Rishi Sunak has come out to dash hopes of an immediate bounce back with jobless claims report hitting record high due to the coronavirus crisis. Jobless claims climbed to a record rate of more than 2m. He went on to say that, the early hopes by the BOE of a V-shaped recession — an optimistic outlook were pretty much misplaces as Britain would be heading into a period of mass unemployment. He also struck a somber note that shows the biggest month-on-month increase in out of work benefits claims since records began in 1971. A further 10m are now precariously relying on the state to pay their wages.
After a record slump in March due to the coronavirus, the ZEW indicator for Germany rose for the second month in a row. The indicator of economic sentiment for Germany stood at 51.0 points in May, up by 22.8 points from the previous month, according to the monthly expert survey published by the Leibniz Centre for European Economic Research (ZEW) on Tuesday.
The Asian markets were mixed in early trading on Wednesday, on the back of losses from Wall Street as the world braces for a longer economic recovery. The People’s Bank of China left its benchmark lending rate unchanged, as expected with Japan’s machinery orders showing a strong rebound from the previous month. Japan’s Nikkei NIK, +0.79% rose 0.7% while Hong Kong’s Hang Seng Index HSI, -0.14% slipped 0.2%. The Shanghai Composite SHCOMP, -0.51% retreated 0.3%
The recent oil rally we have witnessed for the past four days seems to have stalled with markets being cautious as optimism over virus vaccine subsides. WTI for July delivery declined 0.1% to $31.93 a barrel on the New York Mercantile Exchange as of 7:53 a.m. in London after rising 1% in the previous session.
IMF’s Virus funding for Africa surpasses $10billion. An additional $1.2billion of loans were disbursed to Kenya and Uganda, bringing its total emergency coronavirus funding for Africa to $10.4billion. Nigeria and Ghana are the biggest Africa recipients so far of the IMF emergency lines. Egypt does expect to get an approval for $2.7billion for funding this week.