Markets sell-off after Powell says outlook is uncertain

17/09/2020 The good news for SA is that we will be moving to Level 1 from midnight on Sunday, and opening our international borders from the beginning of next month.

Markets have sold off across the globe after Jerome Powell said overnight that rates could stay anchored to the zero-bound through 2023 as the central bank tries to spur inflation moderately above 2% over time. The Fed also did not announce an increase in bond purchases, which some in the market expected. The S&P 500 and Nasdaq both closed lower and the Dow ended well off its session high. Big Tech dragged down the S&P 500 and Nasdaq, with Apple, Facebook and Microsoft all closing lower.The S&P 500 and Nasdaq both closed lower and the Dow ended well off its session high. Big Tech dragged down the S&P 500 and Nasdaq, with Apple, Facebook and Microsoft all closing lower. On the local front the JSE All Share ended the day 0.30% lower, focus will shift to the Reserve Bank policy announcement later, with the market split in terms of interest rate expectations, we also have close-out today and Index rebalancing tomorrow so volumes will pop.

• South Africa Hails Success in Tackling Virus; Reopens Borders.
• Black-Owned South African Fund Managers Increase Assetsby 15%.
• Disappointing 2Q GDP Data Paves Way for SARB to Cut Rates, Economists are split on whether the bank will cut the repurchase by 25 bps, or leave it unchanged at 3.5%.
• IG Top 40 -263 points, 700HK – 1.50%
• Gold – 0.79% $ 1943 on dollar strength
• Oil, Brent – 1.14% $ 41.47, WTI – 1.32% $ 39.63
European stocks are expected to open lower later as investors around the world react to the latest U.S. Federal Reserve meeting.London’s FTSE is seen opening 36 points lower at 6,043, Germany’s DAX 112 points lower at 13,121, France’s CAC 40 down 42 points at 5,022 and Italy’s FTSE MIB 206 points lower at 19,745, according to IG. Investors will be watching out for any policy guidance from the Bank of England which is also meeting later today. No changes to the bank’s monetary stance are expected today.
US markets all closed well off their highs, selling off late in the session, the Nasdaq and S&P closing lower and the Dow marginally up giving up a more than 300 point gain. Members of the Fed indicated the U.S. overnight rate could stay anchored to the zero-bound through 2023 as the central bank tries to spur inflation. Fed Chairman Jerome Powell reiterated this stance in a news conference, saying easy monetary policy will remain “until these outcomes, including maximum employment, are achieved.” He also said that parts of the U.S. economy will keep struggling unless lawmakers move forward with further fiscal stimulus. That comment from Powell came as lawmakers struggle to reach a deal on a new coronavirus aid bill.
Later today the markets will get the latest look at U.S. weekly jobless claims and housing starts data are also set for release.
Stocks in major Asia-Pacific markets traded lower on Thursday as investors react to overnight developments from the U.S. Federal Reserve. All major markets are lower with the Hang Seng leading the way, trading down 1.46%, Tencent – 1.5%. In Australia, the S&P/ASX 200 traded 1.11% lower. The moves came as data showed seasonally adjusted employment in Australia increasing by 111,000 people between July and August — according to the country’s Bureau of Statistics. That compared against expectations of a 50,000 decline in a Reuters poll. Overall, the MSCI Asia ex-Japan index shed 1.2%.
Have a great day.