Stocks in troubling waters as economic recovery from pandemic remains bleak

On Thursday, stocks had been recorded to have fallen whilst bonds remained to be in demand. These had happened due to apprehensions of the Coronavirus infecting anew coupled with a gloomy evaluation from the U.S. Federal Reserve head that economic recovery from the pandemic are not yet in the cards.

“The path ahead is both highly uncertain and subject to significant downside risks,” stated Fed Chair Jerome Powell through a webcast speech.

Powell sees a Recession worse than that from the Second World War, compelling him to call for additional fiscal spending from the fallout caused by the pandemic.

South Korea and China had sepaeately reported of new outbreaks which caused alarm, especially with other nations re-opening after months of lockdown.

European stock futures had plummeted as every Asian market is falling. While this is the case, Bonds and the dollar were steadfast overnight.

FTSE futures (FFIc1) and EuroSTOXX 50 futures (STXEc1) had seen a drop of 0.5%. S&P 500 (ESc1) had floundered to alleviate itself above the flat.

Meanwhile, MSCI (NYSE:MSCI)’s broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) fell by 1%.

Tony Huntley, chief investment officer at Melbourne-based fund manager Adansonia Capital had this to say:

“We don’t think the market is going to re-test the lows, but it’s probably seen its best also, so I’m expecting a correction… The issue is whether we get a second wave (of infections) … that would be my greatest fear.”

Movement restrictions have yet again been imposed by China near its borders with North Korea and Russia. This came right after a new outbreak had been detected in those regions. South Korea is also in the hot seat as reports of another infections had been made known to center at the bars and nighclubs in Seoul.

Regarding the resurgence of the ourbreak, Mike Ryan, an emergencies expert from the WHO bodly stated in a Wednesday online briefing that,

“It is important to put this on the table: this virus may become just another endemic virus in our communities, and this virus may never go away,”

After Powell had talked down the possibility of negative interest rates in the U.S. bonds and the dollar had rallied and extended gains on Thursday.

On the other hand, yields on benchmark U.S. 10-year treasuries had fallen a bit to 0.6395%.

Oil prices had only made small gains aided by the drawdown of U.S. inventories. However, analysts had noted the continuous rise of the bleak outlook.

While holding comfortably above $1,700 an ounce at $1,711.20, Gold had been recorded to pull back from a one-week high hit within the earlier periods of the Asian session.

As all these parts are moving, markets are anticipating the European Central Bank’s latest economic bulletin scheduled at 0800 GMT alongside the most recent U.S. jobless claims data at 1230. GMT.