US stocks closed down in spite of Fed actions

The US stocks continued downwards on Monday in spite of the Fed massive announcement of unlimited Treasury purchases. Dow Jones closed down 3,04 % to 18 591,93 points, the S&P 500 index closed down 2,93 % to 2337,40 points and Nasdaq index closed down 0,27 % to 6860,67 points.

The US Senate was not able to agree about the 2 trillion dollars economic stimulus package during the weekend, so markets are waiting for the bill and the details related to it. Germany announced its 800 billion euros stimulus package to cover the economic recession in the country affected by the coronavirus. UK Prime Minister Boris Johnson announced more lockdowns in the country on Monday evening in order to save more lives and ensure the NHS operations.

Monday was also the first trading day without the cheering on the floor of NYSE. The silent electronic trading was historically event. According to some brokers, the floor trading has been cancelled only a couple of times in their trading history: during the terrorist attack on September 11 and during the Superstorm Sandy. It is expected to resume to normal when the virus outbreak is over.

In London, the FT-SE 100 index closed down 3,79 % to 4993,89 points. In Germany the DAX-index closed down 2,10 % to 8741,15 points and in France the CAC 40-index closed down 3,32 % to 3914,31 points.

In Asia the Hang Song index closed down 4,86 % to 21 696,13 points and in Tokyo the Nikkei-index closed up 2,02% to 16887,78 points.

Fed to support the flow of credit to households and businesses

The US central bank, Federal Reserve announced major additional measures to support the flow of credit to households and businesses. According to the statement on Monday, the central bank is supporting those afflicted and to limit the further spread of the virus.

– While great uncertainty remains, it has become clear that our economy will face severe disruptions. Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate, the Fed said.

The action include for example credit to employers, consumers and businesses by establishing a new program, which will provide up to 300 billion dollars in new financing.  Actions include also support credit to large employers and more liquidity for corporate bonds.

It will also include asset-backed securities loan facility to help consumers and businesses. Asset-backed include for example student loans, auto loans and credit card loans.

The US municipalities will get help by facilitating the flow of credit by expanding the commercial paper funding.

The Fed has also informed the elimination of reserve requirements.

-Guidance encouraging banks to be flexible with customers experiencing financial challenges related to the corocernavirus and to utilize their liquidity and capital buffers in doing so, the Fed concluded.

 

 

Fed announced major expansion in lending -WSJ

The Federal Reserve has today announced a major expansion of lending programme. According to Wall Street Journal, they are designed to unclog credit markets that seized up last week, expanding its facilities to include certain types of corporate and municipal debt.

– The Federal Open Market Committee (FOMC) will purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy. The FOMC had previously announced it would purchase at least $500 billion of Treasury securities and at least $200 billion of mortgage-backed securities. In addition, the FOMC will include purchases of agency commercial mortgage-backed securities in its agency mortgage-backed security purchases, the Fed said on Monday.

-The Federal Reserve is committed to using its full range of tools to support households, businesses, and the U.S. economy overall in this challenging time. The coronavirus pandemic is causing tremendous hardship across the United States and around the world. Our nation’s first priority is to care for those afflicted and to limit the further spread of the virus. While great uncertainty remains, it has become clear that our economy will face severe disruptions. Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate, the Fed said.

 

Stocks plunged on Monday – virus update

European stocks plunged on Monday despite the co-ordinated intervention by the several central banks. In London, the FTSE-100 index was trading down over 8 %. In Germany the DAX-index was trading down over 10 % and in France the CAC40 -index was showing over 11 % decline. Last week all the leading stock market indices declined by 10-20 in the global markets.

The decline is a follow of the global economy meltdown by the coronavirus. On Sunday the US Federal Reserve made its second emergency rate cut to support the markets. The Bank of Japan followed on Monday. Last week the European Central Bank and the Bank of England announced their stimulus packages to the markets.

The European finance ministers are having emergency meeting on Monday. According to Bloomberg, the IMF is planning to act with 1 trillion dollar loan capacity to fight the coronavirus.

In Germany, the government is easing bankrupt rules to help companies. The measures models the relief given to companies hurt by the floods, Bloomberg News says.

During the weekend the US extended the travel ban to Europe and Germany made its travel ban to neighbouring countries like Italy, France and Denmark. Countries have announced school shutdowns in Europe, but also in the US, New York effective from today. The US President Donald Trump declared a national emergency on last Friday.

Countries have announced major flight cancellations globally. Many local and global sports events have been cancelled. The summer Olympics Games 2020  in Tokyo is still according to plans.

The global coronavirus update: 169 496 confirmed cases and 6633 deaths. In China the deaths are 3213, in Italy 1809, in Iran 853 and in Spain 288.

 

 

 

Calls for coordinated fiscal and monetary measures increase

Several financial advisors and experts have expressed today their opinions about the coordinated need for fiscal and monetary measures to tackle the coronavirus outbreak.

For example the former US Treasury Secretary Lawrence Summers told in the Bloomberg Markets interview that he is urging governments to act to fight against the virus.

According to him both micro and macro measures are needed at the moment in order to support the economic activity. He said also that he is worried about the European economic situation with Italy, France and Germany in focus. The economic outlook was not bright before the virus and now the “epidemic” would worsen the scenario further. Regarding the US economic outlook he said the economic recessions is “more likely than not”.

Also the International Monetary Fund´s chief economist Gita Gopinath urged leaders to make targeted fiscal and monetary measures to help households and businesses. She was also speaking in Bloomberg Markets interview.

The stock markets dropped over 7 % in New York on Monday.  This was the biggest plunge  since the financial crisis in 2008. Dow Jones was having free fall of 2014 points before the trading halt.

Dow Jones closed down -7, 8 % to 23 851,02 points, S&P 500 -index closed down – 7,60 % to 2746,56 points and Nasdaq-index closed down – 7,29 % to 7950,68 points. The crude oil dropped 24 % to 34,28 dollars per barrel due to the oil price war.

On the other hand coffee (Arabica) price went up 3,84 % to 109,65 dollars and natural gas up 6,32 % to 1,82 dollars. The US 10-year Treasury was 0,51 % while in Europe the 10-year was trading -0,84%.

The financial and energy sectors were among the biggest losers. For example Citigroup was down 16 %, Bank of America -15% and JP Morgan -14%. Also tech-sector was having sell-off and big tech lost over 10 % of their values.

Federal Reserved was in the markets and added some liquidity in the repo-markets on Monday. Last week the US Central Bank eased the rates by 50 basis points.

In Europe the stocks dropped also over 7 %. In London the FT-SE 100 -index showed decline of 7,69 % to 5965,77 points, in Germany the stocks went down 7,94 % to 10 652,02 points and in France the CAC 40 closed down 8,39 % to 4707,91points.

The European Central Bank is having its policy meeting on Thursday. The UK Government will publish its Brexit budget 2020 on Wednesday.

 

Powell: Climate Change could cause systemic risk in longer-term

The US Federal Reserve Chairman Jerome Powell said today that he thinks the Climate Change could cause systemic risk in the financial system in longer-term perspective. He was speaking in the press conference after the FOMC meeting on Wednesday in Washington.

He said the systemic risk is possible and that is why it is also part of the Federal Reserve´s role to supervise the financial markets in order to keep the financial stability with other Fed agencies.

Mr Powell also underlined that it is Governments role to make the decisions to mitigate the Climate Change impact in the economy in general. The Central Bank is doing their role with the system stability and supervising the market participants, like banks and institutions.

FED leaves the rates unchanged – inflation moving closer 2 %

The US Federal Reserve leaves its key interest rates unchanged on Wednesday meeting. The target range of the federal funds rate is 1,5% to 1,75%.

According to the Fed Chairman Jerome Powell, the monetary policy is well positioned to support Americans. He said in the press conference that the inflation is moving closer to 2 % in the coming months.

 

 

 

The US stock market loss the January return

The US stock markets continued the slide on Monday and after the trading day all the January returns were erased. Dow Jones -index closed down 1,57 % to 28 535, 8 points, S&P 500 –index closed down 1,57 % to 3243,63 points and technology-heavy Nasdaq down 1,89 % to 9139,31 points. The main reason was the concern of the Chinese coronavirus and its impact on the global trade and economic growth.

Some of the leading companies including Apple, Microsoft and Amazon were down. Apple (AAPL) closed down 2,94 % to 308,95 dollars, Microsoft (MSF) down 1,67 % to 162,28 dollars and Amazon (AMZN) down 1,79 % to 1828,34 dollars. Apple is going to publish its quarterly figures on Tuesday.

The electric car manufacturer Tesla (TSLA) closed down 1,20 % to 558,02 dollars, Uber (UBER) down 1,44 % to 36,30 dollars and Lyft (LYFT) down 2,21 % to 47,36 dollars. In the luxury fashion and design sector Ralph Lauren (RL) stock closed down 2,84 % to 112,96 dollars.

On the other hand, Pfizer (PFE) the pharma company, closed up 0,85 % as did the Beyond Meat (BYND)+ 4,4 %.

The Federal Reserve meeting will be on Wednesday, the same day the US investment banking company Goldman Sachs (GS) is having its Investor Day in New York.

The CEO of Goldman Sachs, David Solomon recently sent a letter to major company CEOs to remind about the Climate Change issues and how to mitigate and report about it. Goldman Sachs also announced that it will not participate in any new IPOs, if diversity issues are not met in the board.

European luxury stocks down on Monday due China virus

European luxury stocks led the stock market downturn in Europe on Monday with travel and leisure stocks. The markets were hit by the coronavirus impact in China. The disease is expected to affect the global trade and economy growth. China is the fastest growing luxury market in the world, so the retail sales expectations are played down by the travel bans and closing shops in mainland China.

The leading luxury brands in Europe fell between 2,5 – 4,8% in Europe. For example Burberry (BRBY) fell 4,79 % to 1998,50 pounds, the French LVMH (LVMH) fell 3,68 % to 401 euros, Dior (Dior) fell 3,69 % to 433 euros, Hermes fell 4,30% to 680,40 euros, Kering (KER) 3,61 % to 552,60 euros and Italian Moncler 4,17% to 38,86 euros.

In Switzerland the Richemont fell 2,72 % to 73,66 Swiss francs and Swatch Group (UHR) fell 2,54 % to 253,40 francs. During the forex trading, Swiss francs and Japanese yen were the safe havens in the markets.

Also the airlines, hoteliers and luxury cruising shares were hit as well. For example the British Airways fell over 6,3 % and Easyjet 6,1 % in London. Also the mining companies were down.

The FTSE 100 fell 2,29 % to 7412,05 points in London on Monday, while in Germany the DAX-index closed down 2,74 % to 13204,77 points and in France the CAC 40 -index closed down 2,68% to 5863,02 points.

During the week the Bank of England is having its meeting on Thursday and on Wednesday the Federal Reserve is also having its meeting. According to Bloomberg,  interest rates are expected to be unchanged.

China has stated that the coronavirus is not under control and according to Bloomberg deaths in China climbed to 80 referring to the National Health Commission. There are 2,744 confirmed cases on China’s mainland, and more than 30,000 people are under observation, the authorities said.

The Chinese stocks markets are closed in Hong Kong and in Shanghai until next week and the China government has extended the Lunar New Year holiday until Fed 2.

In the forex markets, the euro was trading at 1,1018 dollars, down -0,66 % and against Swiss francs 1,068, also down 0,27%. Euro against the UK sterling was 0,8441, up 0,15%. The US dollar was trading at 108,93 yen, down 0,32 %.

On Friday 31st Jan, the UK will be leaving the EU at 11 pm.

US stocks up – Uber & Lyft gained

The US stocks gained modestly in New York on Wednesday trading. The Fed, central bank left the key rates unchanged and expects that there is no need to change the rates during next year. The inflation is estimated to increase next year and would reach the inflation 2 % target in 2021.

Dow Jones closed up 0,11% to 27911,09 points, S&P 500 -index closed up 0,29% to 3141,62 points and tech-focused Nasdaq up 0,44 % to 8654,05 points. Tech and materials were the leaders of the trading day.

The ride-hailing companies Uber (UBER) and Lyft (Lyft) gained on Wednesday due to the positive report from Barclays. According to the estimate, Barclays estimates that both companies are well positioned to turn profit. Uber closed up 1,86 % to 28,42 dollars and Lyft closed up 4,64 % to 47,36 dollars.

Tesla (TSLA) closed up 1,11 % to 352,70 dollars, Ford up 0,44 % to 9,11 dollars and Apple (AAPL) up 0,85 % to 270,77 dollars.

The Fed also published its economic outlook, which estimates moderate growth for the next year and the unemployment rate is expected to stay at 3,5 %.

The big question of the US China trade deal is still open. The 15th December trade tariffs deadline is on Sunday and according to some media information, there have been talks to delay the deadline.