Stock markets have now seen the "peak of the Fed stimulus" unless these two things happen

Stock markets have now seen the “peak of the Fed stimulus” unless these two things happen

US Federal Reserve Chairman Jerome Powell says more fiscal stimulus is expected from Congress

Eric Baradat / Agence France-Presse / Getty Images

It seems to be a difficult day for shopping.

The investors were left frustrated from the Federal Reserve’s action – or shortage – late Wednesday as the central bank failed to show a new impetus. The Fed said so planned to maintain interest rates almost to zero by the end of 2023 at the earliest, as President Jerome Powell gave a cautious outlook.

In ours call of the dayLena Komileva, chief economist at G-Plus Economics, said the markets had now seen the “peak of the Fed push”, preventing a government error or market shock.

“The Fed’s new inflation framework did not lead to a new policy regime or action, but to a more flattering policy cycle that continues to provide a greater incentive to revise the economy to a new COVID standard,” he said.

“This reinforces our view that by preventing a new external shock to the economy, or a fiscal policy error that did not bring new support to the recovery after the November election, markets have seen the Fed stimulus peak,” Komileva added. .

No indication of further action by the Fed, AxiCorp market analyst Milan Kotkovic says the focus will now be on Congress over a new stimulus pack, with further delays that may affect markets.

“The focus will now return to the US Congress, where Democrats and Republicans are still struggling to agree on a stimulus package. “Investors are becoming more and more impatient with the lack of progress and the market sentiment could become sour if there is no agreement soon,” he said.

Goldman Sachs GS,
+ 1.35%
Economist David Mericle noted that while Powell said more tax incentives were expected from Congress, there were risks in both directions. Merklett added that a democratic sweep in the election would likely mean “substantial further stimulus”, while failure to negotiate a new stimulus bill this month and a divided government after the election “would increase the risk of a slower recovery”.

The markets

After a slight rise on Wednesday, the Dow Jones Industrial Average DJIA,
+ 0.13%
set to fall as Dow futures YM00,
-1.14%
scored 0.9%, or 254 points, lower before opening. Nasdaq futures NQ00,
-2.23%
fell 1% and the S&P 500 futures ES00,
-1.51%
was 1.1% lower as traders reacted to the Fed’s cautious global economic outlook.

European stocks also fell in early trading, with the pan-European Stoxx 600 SXXP,
-0.79%
0.6% down, the German DAX DAX,
-0.71%
0.6% lower and the FTSE 100 UKX,
-0.37%
drop of 0.8%. The increase in coronavirus cases in countries across the continent has also contributed to the negative climate.

The buzz

Shares of Snowflake SNOW,
+ 111.60%
increased by 111.6% in Wednesday’s session, after the production of the company the largest initial public offering of software recorded, leaving the company with a market value of approximately $ 70 billion.

The Bank of England is is expected to maintain interest rates, amid conflicting signs of a UK economic recovery.

Oracle’s ORCL Database Software Company
-0.83%
offer for the Chinese video sharing application that TikTok has caused concern within the Trump administration that it still poses a threat to national security, according to a Bloomberg report late Wednesday.

Anglo-French biotechnology team Novacyt ALNOV,
+ 6.25%
the first half won, as sales of COVID-19 tests caused revenue growth.

European car sales fell 18% in August after three months of recovery after the lockout, raising concerns about a recovery. Renault RNO car manufacturers,
-1.35%
and Volkswagen VOW,
-1.77%
was among the industry’s sharp falls on Thursday.

President Donald Trump has said a COVID-19 vaccine could be released in mid-October, disputing previous comments by Director of Centers for Disease Control and Prevention Dr. Robert Redfield, who said a vaccine may not be available to the general public until next year.

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