The Ibex prepares for further falls due to Powell's pessimism and geopolitical tension
Futures come with declines of 1.3% on average
The falls will return to Europe this Thursday (futures: -1.3%) after the steep falls of the last session on Wall Street (Dow Jones: -1.9%; S&P: -2.37%; Nasdaq: -3 , 02%). Jerome Powell, president of the Fed, asked on Wednesday that the US government launch a new round of stimulus on the world's largest economy. From the Federal Reserve they feel alone as Republicans and Democrats lengthen their negotiations for months and are unable to reach an agreement on another package of measures to mitigate the effects of Covid-19.
"The main problem with the Federal Reserve is that American politicians seem more interested in fighting an election campaign than in passing a new stimulus plan that would help the American people, and this much more pessimistic assessment seems to have again undermined sentiment in what is proving to be a very fickle investment climate, "explains Michael Hewson, chief analyst at CMC Markets in London.
This slide is expected to translate into a weaker start for European equities this morning, after Asian markets also had a bad day, albeit rising tension between North and South Korea over the killing of a South Korean official in North Korea doesn't help either.
In Europe, after the PMI yesterday, this Thursday the German IFO will be known. Experts acknowledge that the need for fiscal measures is increasingly evident after observing some recent economic data, highlighting the "shortcomings" shown by the German economy, among others. They also explain that the IFO survey probably reinforces the idea that Germany is not doing well, given the recent changes that have been made in the way it is calculated. Now the business climate survey includes a much larger share of the services sector, which means that the slowdown seen in the latest PMIs should also be reflected in the survey.
As for the situation with the coronavirus, the number of cases reported daily in the United Kingdom continues to increase. The country announced 6,718 cases yesterday, with an increase of 1,252 since Tuesday. Meanwhile, two German government ministers, Heiko Maas and Peter Altmaier, are now in quarantine after close contacts received positive coronavirus tests.