IMF economic warnings dented cautious optimism that lockdowns were slowing the spread of the virus as it is not clear whether economies will recover quickly.
Global stocks fell on Wednesday as oil prices dropped. Economic warnings of the worst global recession since the 1930s underscored the economic damage done by the coronavirus pandemic.
Much of the damage was felt by oil companies. The International Energy Agency forecast a drop in oil demand to levels not seen in 25 years. Further, it warned no output cut by producers could offset the decline.
The IMF predicted the world this year would suffer its steepest downturn since the Great Depression of the 1930s.
U.S. retail sales suffered a record drop of 8.7% in March, setting up consumer spending for its worst decline in decades. U.S. stock index futures extended losses on the report.
China earlier moved again to cushion its economy, cutting a key medium-term interest rate to record lows.
Focus is now starting to shift to the corporate results due in the coming weeks. Signs of stress caused by the pandemic are already widespread.
President Donald Trump announced a suspension of U.S. funds to the WHO, saying it should have done more to head off the pandemic.
Big lender nations will later on Wednesday confirm they are relieving the world’s poorest countries of debt payments this year. Finance officials from the G20 major economies will meet online to finalize an agreement for some 76 countries to help them deal with the pandemic.
START TRADINGForex – Economic warnings dented markets optimism
Investors realized it was too early to be optimistic about a recovery from the coronavirus crisis.
The dollar rebounded as concern persisted that the damage to the global economy. The U.S. currency gained across the board, particularly against currencies considered riskier bets. It rose 0.8% to just shy of 99.6 against a basket of rivals, on track to break a four-day losing streak.
A weakening global economy enhances the safe-haven appeal of the U.S. dollar as it is the major currency in global trade. Greenback is also the predominant medium of exchange in world markets.
The dollar rose more than 0.5% versus the euro and Swiss franc, and inched up 0.1% against the Japanese yen.
The pound fell back on Wednesday from one-month highs against the dollar and euro. Sterling’s 1.3% fall against the dollar was driven by a dire global economic forecast from the IMF.
Versus a broadly firmer dollar, the pound was down as much as 1.3%, at $1.2465, erasing Tuesday’s gains. Against the euro, it fell to around 87.38 pence per euro.
Oil prices sank on Wednesday after the United States reported its biggest weekly build of crude oil inventories on record. Brent crude was down $1.88, or 6.4%, to $27.72 a barrel by 10:46 a.m. EDT (1446 GMT). US WTI crude slid 24 cents, or 1.2%, to $19.87.
Gold prices fell as investors locked in profits after recent gains. It was last at $1,721 an ounce.
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Sources: Reuters, Investing, CNN money