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Riku Tanaka
May 14 22:00

Stocks drop as pandemic recovery starts to seem inaccessible

"The path ahead is both highly uncertain and subject to significant downside risks," Fed Chair Jerome Powell said in a webcast speech.
Stock markets fell and bonds were sought after on Thursday (May 14) as fears developed over a second flood of coronavirus cases and a grave appraisal from the leader of the US Central bank stemmed hopes of a fast economic recovery from the effects of COVID-19.
"The path ahead is both highly uncertain and subject to significant downside risks," Fed Chair Jerome Powell said in a webcast speech.
Powell cautioned of an economic downturn more terrible than anything experience by the US since World War II, and said that additional financial stimulus from the government is necessary to relieve the economic aftermath from the global contagion. This remark sounded somewhat unusual coming from a national bank official who, up till now, has abstained from offering guidance to government bodies.
New flare-ups of coronavirus cases in South Korea and China raised global concern, even as a growing number of nations start to re-open their businesses after long lockdown periods.
European stock futures dropped, and all Asian markets fell as well. Bonds and the US dollar stayed stable for the time being.
FTSE futures and EuroSTOXX 50 futures fell by about 0.5%, while futures for the S&P 500 barely gained any ground. MSCI’s broadest index of Asia-Pacific offers outside Japan fell 1%.
"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," said Tony Huntley, chief investment officer at Melbourne-based fund manager Adansonia Capital. "The issue is whether we get a second wave (of infections) ... that would be my greatest fear," he continued.
Travel limitations near the North Korean and Russian borders we brought back by the Chinese government, after another flare-up of coronavirus cases was reported in the area. Meanwhile, South Korea is attempting to contain its own outbreak, which was tracked to originate in bars and clubs in Seoul.
"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," WHO emergencies expert Mike Ryan told an online briefing on Wednesday (May 13).
Bonds and the US dollar spiked after Fed Chairman Jerome Powell fought off the idea of negativeinterest rates in the nation, and extended the gains throughout Thursday (May 14). Yields on benchmark US 10-year Treasuries fell somewhat to 0.6395%.
An unusual reduction in US stockpiles brought oil prices up by scant amounts, yet the distressing viewpoint capped the growth.
Gold prices eased off from its a one-week high towards the beginning of trading session in Asia, however it stayed strong above the 1,700 mark, at US$1,711.20 per ounce.
Markets are eagerly awaiting the release of the European Central Bank's upcoming economic bulletin at 0800 GMT, as well as the upcoming data on US unemployment claims at 1230 GMT.