The Federal Reserve is planning to launch a massive rollout of monetary easing in the financial markets to combat the economic damage brought by the pandemic spread of the new coronavirus. Investors’ fears seemed to have deepened by this move.
Market investors see the monetary easing move as an indicator of how tremendous the economic damage is right now faced by the U.S. economy. They also foresee a recession lurking in the markets while others presuppose the easing as an insufficient measure to halt the impact of the spreading coronavirus on the economic activities.
“This is an indication that the central bank is very scared about the environment we’re in. The policy response is so strong, it’s likely to spook investors,” Michael O’Rourke, chief market strategist at Jones Trading said.
Stock futures dropped to their daily limit on Sunday following Fed’s declaration of cutting interest rates to almost zero and bid for bond buying once more.
Goldman Sachs Group Inc lowered its U.S. growth prediction for the first two quarters of the year. Its new GDP growth forecast for the first quarter is set at 0% from the previous 0.7%. For the second quarter prediction, it expects the U.S. growth to contract by 5% from its original 0% forecast.
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