Global stocks plunge over doubts of America’s economic recovery
MSCI’s broadest index of Asia-Pacific shares outside Japan, witnessed its biggest daily plunge in five weeks. Similarly, the MSCI world equity index, which monitors shares in 49 countries, was down 0.6%
The pan-European STOXX 50 was down 0.85% and London’s FTSE 100 dropped 1.17%, as at 11.02 am GMT
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The Fed’s minutes from its July meeting, released yesterday, revealed doubts about the U.S. economic recovery. The minute showed that the swift labor market rebound seen in May and June had likely slowed.
Several Fed policymakers said they may need to ease monetary policy to help get the economy through the COVID-19 pandemic.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in his explanatory note to Nairametrics on the prevailing macros bringing the bears back to the global equities market, said:
“In no uncertain terms, the FOMC minutes deflated the markets’ U.S Federal Reserve air balloon as they unequivocally temper September.
“Without the Fed’s air balloon floating markets today, stocks are temporarily succumbing to forces of gravity.
“With interest rates likely staying low for the next 2-3 years, it is unlikely US stocks will have to deal with a particularly deep or intense air pocket as the wall of money argument seems always to win out.
“US equities were weaker overnight with the S&P stepping back from its record close on Tuesday.”
Stocks had been bubbly and trading stronger for most of the session, but turned lower after the Fed minutes tempered expectations for more near-term monetary easing.