ECB’s Grim Forecast Impacts U.S. Stocks

The US stocks fell due to concerns of a global slowdown as the European Central Bank announced on Thursday that it was reducing the forecast for 2019 and also reported its plans for stimulating the European growth.

In the market:

Stocks

Europe Stoxx 600 index saw a fall of 0.4% by the end of the day. The FTSE 100 index also fell and reduced by 0.45%. The MSCI Index of the emerging market also decreased by 1.3%, while the S&P 500 Index was at a 0.8% low at the end of trading. Japan’s Nikkei was at a 0.7% decrease.

Currencies:

After the ECB announced its reduced estimates for the EU, the euro fell to its lowest since June 2017 with a fall of 1.1% and was at $1.1182. The yen rate increased partially by 0.1% and was at 111.61 for a dollar. The British pound continued its struggle due to Brexit and economic concerns in the region and was at $1.3076, which was a drop by 0.7%. The highlight of the day was the Bloomberg Dollar spot index which reached its highest in 10 weeks with an increase of 0.7%.

Bonds:

Britain’s long-term bond yields dropped by 5 basis points to 1.17% which is not surprising. Even Germany’s yields on its 10-year bonds fell to 0.062% a reduction of 6 basis points. Surprisingly, the US Treasuries also decreased by 5 basis points and was at 2.64%.

Commodities:

Gold was steady and remain unchanged at $1,285.66 for an ounce. The WTI increased to $56.54 for a barrel an increase of 0.6%.

Investors are now concerned a lot as more and more challenges are coming to the forefront. Even as matters of the trade deal with the US and China is still not clear, the reduction in estimates by the European Central Bank brings more worries. Moreover, the outlook for growth for every country in the EU was reduced adding to the gloom.

The US economy is thought to be shielded from the inflation worries in Europe and also its slow economic growth despite the US stocks tanking. Many analysts believe that the decisions to reduce growth estimates by the ECB President Mario Draghi as a good thing for the US stock market due to its extremely volatile nature of trade that it has witnessed in the past few months. Many analysts opine that though the first quarter earnings were down, it could fare better in the rest of the year.