Fed: Rates unchanged – economy -6,5% 2020

The US Federal Reserve said today that the Central Bank has kept the rates unchanged at its policy meetings. The target key federal funds rate is at the moment 0- 1/4 %. The Central Bank published also its economic projections, which show that the economy is expected to decline 6,5 % this year and increase by 5 % next year.

-The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals, the bank said.

-The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world. The virus and the measures taken to protect public health have induced sharp declines in economic activity and a surge in job losses. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Financial conditions have improved, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

-The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals, the Fed said.

The Fed also published its economic outlook projections which show the economy is expected to show 6,5 % decline this year and increase of 5 % in 2021 and 3,5 % in 2022. In December, before the coronavirus, the Fed estimated that the growth would be 2 % this year and 1,9 % 2021.

The unemployment is expected to increase to 9,3 % this year and to be 6,5 % in 2021. The median estimate for the federal funds rates is 0,1 % until 2022.

US stocks to turn mixed – Apple and Tiffany gained

The US stocks turned mixed on Tuesday trading in New York. Dow Jones index closed down 1,09% to 27272,30 points, S&P 500- index closed -0,78 % to 3207,18 points and tech-heavy Nasdaq-index closed up 0,29 % to 9953,75 points.

One of the gainers was tech company Apple (AAPL) which is expected to announce a shift to use its own chips. According to Bloomberg News, the company is planning to end the use of Intel chips in its Macs and to start to use their own from the 2021. The announcement is expected on the Apple WWDD event on June 22nd. Apple shares rose 3,16 % to 343,99 dollars.

Tiffany, which published its Q1 2020 report, gained 1,95 % to 124,56 dollars. The company said the net loss of Q1 2020 was 65 million dollars due to the coronavirus closures, but the rebound in luxury sales has started already in April in Mainlaind China.

Tesla (TSLA) shares closed down 0,97 % to 940,67 dollars and Uber (UBER) closed also down, 1,32 % to 36,59 dollars. In the pharma sector, AstraZeneca closed up 0,29 % to 52,73 dollars and Gilead Sciences also up 0,81 % to 77,59 dollars. Bloomberg reported on Sunday that AstraZeneca have been interested to have a merger with Gilead. Both companies are working with the coronavirus vaccine development.

The markets are waiting for the Fed decisions and comments about the ecnomy due to Wednesday.

The global coronavirus update: confirmed cases over 7,1 million and deaths 408.954. In the US, the cases totalled 1,9 million cases and deaths 111.751. According to WHO, although the situation in Europe is improving, globally it is worsening. The most growth cases are now in Latin America and Russia.

 

 

 

 

 

 

 

US: S&P 500 erased the corona fall

The US stocks continued rally on Monday trading and S&P 500 index closed up 1,20 % erasing the corona loss at the same time. Dow Jones closed up 1,70 % to 27.572,44 points and Nasdaq-index up 1,13 % to 9924,75 points.

The positive impact from Friday unemployment figures and the reopening of the businesses in New York helped to lift the markets. On Wednesday the Federal Reserve will give new economic projections, but the key rates are expected to be kept above zero.

Pharma companies AstraZeneca and Gilead Sciences (GILD) were trading mixed while Gilead closed up 0,2% to 76,97 dollars while AstraZeneca (AZN) closed down 2,7 % to 8200 pounds in London. Bloomberg reported on Sunday that Astra has been in merger-talks with Gilead for a month ago.

In Europe, the DAX-index closed down 0,22 % to 12.819,59 points and in France the CAC-40 index closed down 0,43 % to 5175,52 points. In London, the FT-SE 100 index closed down 0,18% to 6472,59 points.

According to John Hopkins University, the global coronavirus confirmed cases increased to over 7 million and deaths were over 400.000 (7.081.665/405.002) on Monday.

 

Stocks ended down in NY – Fed warned of longer recession

The stock markets ended down in New York on Wednesday after the Federal Reserve Chair Jerome Powell said in a speech that the economic recovery might take longer time than expected and that more monetary actions might be needed. Dow Jones closed down 2,17 % to 23 247,97 points, S&P 500 index closed down 1,75 % to 2820 points and Nasdaq-index closed down 1,55 % to 8863,17 points.

The conclusion of the Fed views was that the recovery could be slower while the unemployment is high and people find it harder to cope with the situation. The overall consumer spending and economic activity might take some time.

Mr Powell also said that the global Central Banks have been buying time for health organisations and Governments  to help to cope with the virus and the needed economic stimulus plans. He also commented that Fed is not considering negative rates at the moment.

In the tech-sector ride-hailing company Uber (Uber) rose 1,91 % to 33,02 dollars, while Lyft was down 3,93 % to 28, 37 dollars. According to Bloomberg, Uber said it will require its drivers and passengers to wear masks in cars. There is also market speculation of Uber buying its rival company Grubhub (GRUB).

Mobile tech company Apple (AAPL) declined 1,21 % to 307,65 dollars, Google (GOOGL) went down 1,95 % to 1348 dollars and Microsoft (MSN) also down, 1,51 % to 179,75 dollars.

Tesla (TSLA) closed down 2,28 % to 790,96 dollars. The company received a possibility to open the Fremont factory in California next week  if the local health issues were solved before the opening.

In Paris French luxury group LVMH declined over 4 % to 333,90 euros and rival Kering by 3,13 % to 422,30 euros. Hermes rose 0,48 % to 673,60 euros. The CAC-40 index closed down 2,85 % to 4344,95 points. In Germany the DAX-index closed down 2,56 % to 10.542 points.

In London, the FT-SE 100 index closed down 1,51% to  5904,05 points. The luxury group Burberry was down 1,49 % to 1359 pounds.

Fed Powell: Longer recession possible – stocks slide

The Federal Reserve Chair Jerome Powell said today in Washington, that longer economic recession might be possible. Dow Jones and all major equity indexes turned down after the remarks.

According to him, the strong global economy is also in the interest of the Fed and he said the global central banks have made actions to calm the markets and supporting the markets with for example US-dollar swap lines.

-Central Banks have been buying time for local health organisations and governments to act on crises, he said in the Bloomberg TV.

Powell said in this speech in the Peterson Institute for International Economics in Washington that if the actions will be too late or too little, countries may face longer unemployment, longer recession and slow growth.

-Recall that the Fed has lending powers, not spending powers. A loan from a Fed facility can provide a bridge across temporary interruptions to liquidity, and those loans will help many borrowers get through the current crisis. But the recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems. Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery. This tradeoff is one for our elected representatives, who wield powers of taxation and spending, he said.

US stocks gained on Wednesday – virus update

The US stocks gained on Wednesday trading. Dow Jones index closed up 2,19 % to 24 629,40 points, S&P 500 -index closed up 2,66% to 2939,56 points and Nasdaq closed up 3,57% to 8914,71 points.

The news of the possible coronavirus treatment by the Gilead Sciences (GILD) Remdesivir medicine was one of the factors for the market lifting. The macro economic data showed that the US economy has been declining 4,8 % during the first quarter. The Federal Reserve Fed announced it will keep the rates unchanged as long as needed. The fed funds rate is 0 to 1/4 %.

Tesla announced its first quarter figures and according to company info, the total deliveries were 88.496 which are 40 % more than year ago, but 21 % less than the previous quarter. Global sales were 5,99 billion dollars, up form 4,5 billion from year ago.

According to company, Fremont site will produce S/X and 3/Y models, Shanghai site Model 3 (production) and Model Y (construction), in Berlin the company is planning to produce both 3 (development) and Y (construction) models. Tesla Semi, Roadster and Cybertrack will be developed in the US.

Tesla shares closed up 4,08% to 800,51 dollars. Gilead Sciences went up 5,68% to 83,14 dollars.

In Europe the FT-SE 100 index closed up 2,63 % to 6115,25 points, the German DAX-index closed up 2,98 % to 11.107,74 points and CAC40 in France closed up 2,22 % to 4671,11 points.

The global Coronavirus Cases are totally 3.187.030 and deaths 227.177 according to John Hopkins University. In Italy the death toll is 27.682, in the UK 26.097, in Spain 24.275 and in France 24.087.

In Europe, total death toll is 129.311 and in Americas 62.404. (29.4.2020).

Fed will keep rates unchanged as long as needed

The US Federal Reserve announced on Wednesday that the Central Bank is committed to use its full range of tools to support the US economy.

The Committee decided also to maintain the target range for the federal funds rate at 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy is on track to achieve its maximum employment and price stability goals – and have beaten the virus.

– The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world. The virus and the measures taken to protect public health are inducing sharp declines in economic activity and a surge in job losses. Weaker demand and significantly lower oil prices are holding down consumer price inflation. The disruptions to economic activity here and abroad have significantly affected financial conditions and have impaired the flow of credit to U.S. households and businesses, Fed says.

-The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term, the release says.

US junk bonds inflows over 10 billion -FT

The US junk bond inflows were over 10 billion dollars last week according to Financial Times.

The interest to these low rated bonds have increased in the US and in Europe after the Central Banks, the US Fed and the European Central Bank have included these kinds of instruments in their asset purchase programmes.

Fed and BoE announcements – virus update (updated)

Thursday was the last trading day before the Easter holidays and both central banks, the Fed and Bank of England, announced their new tools against the global coronavirus outbreak impact on economies.

The Bank of England said in its statement that the central bank will finance the government coronavirus actions directly. The UK Government has been forced to increase the government borrowing in order to tackle the virus impact on households and businesses.

-As a temporary measure, this will provide a short-term source of additional liquidity to the government if needed to smooth its cashflows and support the orderly functioning of markets, through the period of disruption from Covid-19.

According to Dominic Raab, the Foreign Secretary, the Bank of England made their own independent decision regarding the situation in the economy. He was speaking in the government daily press conference in London.

The government urged people to stay home during the Easter & Bank holidays and avoid social contacts.

In the US, the Fed announced that it will provide new, up to 2,3 trillion dollars in loans to support the US economy. The funding is for households and employers of all sizes.

-Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,” said Fed Chair Jerome Powell.

The global pandemic situation on Thursday showed 1.536.979 confirmed coronavirus cases and deaths 92.425. According to John Hopkins University, the death situation in Italy is over 18.000, in Spain over 15.000, in France over 12.000 and in the UK over 7000. Totally coronavirus cases is most in the US, over 450.000 cases.

The stock markets ended up in Europe. FT-SE 100 -index closed up 2,90 % to 5842,66 points, in Germany 2,24 % to 10 564,74 points and in France CAC-40 index closed up 1,44 % to 4506,85 points.

German goverment is said to consider the liftoff of the lockdown after Easter holidays if the virus situation makes it possible. It could mean a gradual return to normal.

The UK Prime Minister Boris Johnson is moved from the intensive care back to the ward, where he will recieve close monitoring, the Downing Street 10 said in the evening. According to the release, he is in extremely good spirits.

The Opec meeting ended with the agreement of the oil production cut of 10 million barrels a day. This is expected to end the price war between Saudi-Arabia and Russia. ICE Brent oil was trading 32,06 dollars, down 2,38%.

During the evening the situation was left open and pending while Mexico did not agree the accord, Bloomberg News writes.

On Friday, Mexico announced it can agree the deal after having discussions with US President Donald Trump that promised help Mexico in the production cut.

Fed: Additional up to 2,3 trillion dollars loan

The US Federal Reserve, FED said on Thursday that it has took additional actions to provide up to $2.3 trillion in loans to support the economy.

-This funding will assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic, the central bank said.

-Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,” said Fed chief Jerome Powell.

-The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible, he continued in the release.