USA stocks fall sharply after Powell warns of "significant downside risks"

USA stocks fall sharply after Powell warns of

USA stocks fall sharply after Powell warns of "significant downside risks"

For a central banker who spent part of his career as a deficit hawk and has tried to avoid giving advice to elected officials, the remarks marked an extraordinary nod to the risks the United States economy is facing from the combined health and economic crisis brought on by the coronavirus pandemic.

North American equity markets slid at the open of Thursday's trade, with the S&P/TSX Composite Index down about a per cent, the S&P 500 and the Dow Jones Industrial Average down one per cent apiece and the Nasdaq Composite Index about 0.7 per cent lower.

Markets sank in a sign of pessimism after Mr.

A pushback against Powell's "downbeat assessments" about USA economic risks and his rejection of the idea of using negative interest rates as a tool for economic recovery "will spill into the Asia session", Attrill said.

This further rattled markets after Federal Reserve Chairman Jerome Powell's somber outlook on the economy and U.S. infectious disease expert Anthony Fauci's warning that the virus was not yet under control.

He added: "Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery". He said that is a decision for "our elected representatives who wield powers of taxation and spending".

The unemployment rate in April rose to 14.7%, and many analysts believe the jobless rate will rise to more than 20% this month.

Los Angeles County's public health director said its stay-at-home order will likely last through July.

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.

On Tuesday, the president of the Cleveland Federal Reserve bank, Loretta Mester, said the US economy may shrink by an annualized 30% rate in the second quarter.

"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.

Powell said the COVID-19-induced job crisis has disproportionately weighed on lower-income households and families. "At the core of investor concerns is the lack of conviction in a self-sustaining global economic recovery".

Hong Kong's Hang Seng index futures .HSI .HSIc1 slipped 0.92%, Australian S&P/ASX 200 futures fell 1.07%, while Japan's Nikkei 225 futures rose 0.05%.

In Europe markets traded lower, as Britain's FTSE-100 fell 0.96%, while France's CAC-40 tumbled 1.86% and Germany's DAX dropped 1.71%. Gold futures climbed 0.39%.

Against the pound GBP=D3 , the greenback was quoted at $1.2238, close to a five-week high.

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