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Recession worries pushed the price of Brent oil briefly back under $100 on Wednesday, and the euro moved closer to parity with the dollar. news online
European stocks rebounded thanks to lower bond yields and bargain hunting, while US stocks also advanced, climbing after Federal Reserve minutes maintained a tough line on inflation.
Europe’s benchmark crude oil contract, Brent North Sea, fell briefly under $100 per barrel in afternoon deals, following its US counterpart WTI, which slumped below the symbolic level on Tuesday.
Citi analysts have forecast that Brent could strike $65 later this year in the event of a prolonged worldwide economic downturn.
Meanwhile, the euro hit a fresh 20-year low point under $1.02 — the European single currency fast closing in on parity with the dollar as traders eye recession for the eurozone and the ECB’s slower moves to raise interest rates than the US Fed.
“A dip in government bond yields has paved the way for bargain hunters to swoop in and snap up European equities,” said market analyst David Madden at Equiti Capital.
Paris stocks rose 2.0 percent, while Frankfurt climbed 1.6 percent.
Nevertheless, “the mood remains febrile,” said Chris Beauchamp, chief market analyst at online trading platform IG.
“The drop in the euro and weakness in yields shows that investors remain very nervous about the economic prospects of the global economy, and the opportunistic bargain hunting in stocks may not have much staying power,” he warned.
London’s benchmark FTSE 100 index managed to gain 1.2 percent despite the political turmoil after UK Prime Minister Boris Johnson was rocked by dozens of resignations from his scandal-hit government.
But two staunchly pro-government outlets, the Daily Mail and The Sun, as well as other media said Johnson had refused to bow to their calls for him to go.
“Political risks do not seem to be having a major impact on UK assets,” noted Markets.com analyst Neil Wilson.
“There are far too many bigger things on our minds right now — inflation, the economy slowing down, strikes.”
Britain is in the midst of nationwide strikes — affecting in particular the transport sector — as wages are eroded by rocketing inflation.
Later, Wall Street stocks also pushed higher as Fed policy makers reiterated their willingness to continue raising interest rates to tamp down price pressures in minutes recounting the central bank’s big interest rate hike in June.
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Market watchers said investors were pleased to see the tough line on inflation, although Briefing.com analyst Patrick O’Hare noted the Fed’s stance was a restatement of its posture in recent statements.
“It’s more because it had been such a terrible first half of the year,” O’Hare said of Wednesday’s gains. “We got so oversold in the month of June. The market is just looking for a ray of hope.”
Elsewhere Wednesday, Asian equity markets closed mostly lower amid a fresh flare-up of coronavirus cases in parts of China, which has seen some cities locked down as part of officials’ zero-Covid policy.
- Key figures at around 2050 GMT –
New York – Dow: UP 0.2 percent at 31,037.68 (close)
New York – S&P 500: UP 0.4 percent at 3,845.08 (close)
New York – Nasdaq: UP 0.4 percent at 11,361.85 (close)
London – FTSE 100: UP 1.2 percent at 7,107.77 (close)
Frankfurt – DAX: UP 1.6 percent at 12,594.52 (close)
Paris – CAC 40: UP 2.0 percent at 5,912.38 (close)
EURO STOXX 50: UP 1.9 percent at 3,421.84 (close)
Tokyo – Nikkei 225: DOWN 1.2 percent at 26,107.65 (close)
Hong Kong – Hang Seng Index: DOWN 1.2 percent at 21,586.66 (close)
Shanghai – Composite: DOWN 1.4 percent at 3,355.35 (close)
Euro/dollar: DOWN at $1.0186 from $1.0266 on Tuesday
Euro/pound: DOWN at 85.43 pence from 85.94 pence
Dollar/yen: UP at 135.93 yen from 135.85 yen
Pound/dollar: DOWN at $1.1921 from $1.1947
Brent North Sea crude: DOWN 2.0 percent at $100.69 per barrel
West Texas Intermediate: DOWN 1.0 percent at $98.53 per barrel
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Notes from APS Radio News
According to Statista, an award-winning service that compiles and analyzes various types of data for governments and corporations, in the US, for example, the average mortality rate in the US has been about .07%.
In previous years, when the seasonl flu was being reported, that type of virus might have a mortality rate of .13%
In general, for most age groups, the recovery rate has been about 99%.
It’s been reported that since the onset of the original virus, variants recorded have been less problematic.
In terms of the economy itself, since the early part of March 2020, a number of central banks around the world engaged in massive levels of “quantitative easing”.
Quantitative easing is defined as a central bank’s purchasing corporate and government bonds.
When a central bank does that, it adds to an economy’s money supply.
Between the early part of March 2020 and until about the beginning of this year, the U.S. Federal Reserve added over $4 trillion to its holdings.
During the Trump administration, the head of Black Rock, Larry Fink was authorized to oversee the Federal Reserve’s purchase of corporate bonds.
As of June 2021, Pfizer’s holdings of real estate amounted to approximately $60 billion, according to reports.
Black Rock, which manages over $10 trillion in assets, is one of the three investments entities, which collectively own about 20% of the shares of the major pharmaceutical corporations, including those of Pfizer.
In 2021 alone, from sales of the mRNA vaccine alone, Pfizer earned at least $33 billion.
The combination of shortages of various types of goods and services, shortages created by lockdowns and quarantines, and infusions into major economies of trillions of dollars has led to higher rates of inflation, accoridng to analysts and a number of economists.