A dose of reality from Federal Reserve Chair Jerome Powell overnight has brought stocks crashing lower. Wall Street closed in the red, with losses spilling over into Asia, and Europe is unsurprisingly looking to open on the back foot, adding to yesterday’s losses.
Doom and gloom, Jerome Powell spoke of an extended period of weak growth, pouring cold water over the V-shaped recovery fantasy that had been spurring the markets higher. Fears of a second wave of the virus are lingering stubbornly as economies reopen and clusters of new outbreaks are appearing. Adding to traders’ angst were comments from the WHO, that coronavirus may never disappear.
This will be a rocky road to recovery. Whilst it is unlikely that we will return to March lows, there will be fundamental changes to many industries which simply mean that they wont be able to return to pre-virus level output with social distancing measures are in place.
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The rise of risk aversion and the adoption of…