* World FX rates in 2020 http://tmsnrt.rs/2egbfVh
(Updates prices, changes comments, dateline; previous LONDON)
By Rodrigo Campos
NEW YORK, March 23 (Reuters) - Unprecedented support from
the U.S. Federal Reserve failed to lift global stock markets on
Monday as investors continued to fret over the economic and
human toll of the coronavirus pandemic.
Traditional safe-havens like U.S. Treasuries and gold rose
as investors fleeing riskier and higher-yielding assets looked
for a place to park their money.
The Fed's move includes new programs that will lend against
student loans, credit card loans and U.S. government
backed-loans to small businesses, as well others to buy bonds of
larger employers and extend them loans. "While great uncertainty remains, it has become clear that
our economy will face severe disruptions," the Fed said in a
statement.
Although S&P 500 futures rose sharply after the
announcement, stocks traded in the red from the opening bell,
dropping almost 5% at one point. The Nasdaq was recently in
positive territory.
"It's their bazooka moment. It's their 'We'll do whatever it
takes' moment," said Russell Price, chief economist at
Ameriprise Financial Services in Troy, Michigan.
"But quite frankly the market is just in a waiting period
right now until the virus runs its course and some of the
therapies and other treatments are able to improve outcomes."
Morgan Stanley analysts said on Monday they expect global
growth to dip close to global financial crisis lows and U.S.
growth to drop to a 74-year low in 2020. Goldman Sachs sent a
similar warning.
The Dow Jones Industrial Average .DJI fell 267.93 points,
or 1.4%, to 18,906.05, the S&P 500 .SPX lost 31.46 points, or
1.36%, to 2,273.46 and the Nasdaq Composite .IXIC added 20.31
points, or 0.3%, to 6,899.82.
The Dow at one point traded below its closing level on
November 8, 2016, effectively erasing all the gains since the
election of Donald Trump as U.S. president.
The pan-European STOXX 600 index .STOXX lost 4.30% and
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
2.27%.
Emerging market stocks lost 5.38%. MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 5.66%
lower, while Japan's Nikkei .N225 rose 2.02%.
Globally, analysts are dreading data on weekly U.S. jobless
claims due on Thursday amid forecasts they could balloon by
750,000 and possibly by more than a million. The Fed's moves put pressure on the U.S. dollar, which has
risen sharply as the panic-selling drives investors toward the
liquidity of the greenback and to dollar-denominated assets.
The buying continued in U.S. Treasuries, for example, and
yields fell sharply.
"At the end of the day, the Fed's injections announced
Monday are designed to backstop liquidity in market functioning
but cannot avert the economic calamity that's already underway,"
said Jon Hill, U.S. rates strategist at BMO Capital Markets.
"It really is just trying to make sure markets work and
companies and municipalities can access markets when needed, but
that doesn't mean layoffs aren't coming, it doesn't mean that a
recession is not coming. And if you're the equity market, it's
really hard to rally even on that news."
Benchmark 10-year Treasury notes US10YT=RR last rose
1-29/32 in price to yield 0.7452%, from 0.938% late on Friday.
The 30-year bond US30YT=RR last rose 4-30/32 in price to yield
1.3719%, from 1.562%.
The dollar index .DXY was little changed after falling as
much as 0.84% after the Fed's announcements. The dollar =USD
fell 0.302%, with the euro EUR= up 0.69% to $1.0768.
The Japanese yen weakened 0.42% versus the greenback at
111.23 per dollar, while Sterling GBP= was last trading at
$1.1522, down 1.02% on the day.
Investors are waiting on the U.S. government to pass
stimulus to support the economy.
"I think the one thing we really need to see is more fiscal
ammunition coming to the fore," said Mazen Issa, senior currency
strategist at TD Securities in New York. “You've got to think
about those that are asked to be socially distant and stay home
from work and not earn a paycheck and they're taking their time
to make them whole. They need to speed it up."
U.S. crude CLc1 recently fell 0.22% to $22.58 per barrel
and Brent LCOc1 was recently at $26.50, down 1.78% on the day.
Spot gold XAU= added 4.1% to $1,558.40 an ounce.
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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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