September 17th, 2020
STOCK MARKET REVIEW – September 17th 2020 at noon
The New York Stock Exchange (NYSE) retreated at noon on Thursday, the day after a meeting of the US Central Bank (Fed) that left market players around the world with mixed feelings.
In Toronto, the S&P/TSX Index fell 78 points, or 0.48%, to 16,217 points.
In New York City, the S&P 500 Index fell 47 points, or 1.4%, to 3,338.
The Dow Jones lost 236 points, or 0.85%, to 27,795 points.
The Nasdaq declined 224 points, or 2.05%, to 10,825 points.
The U.S. economy should do a little better than expected in 2020, but a return to the booming situation of the beginning of the year is still a long way off, anticipated Fed boss Jerome Powell at the Fed’s last meeting before the U.S. presidential election.
The U.S. recession should therefore be less brutal this year, but the rebound will be less strong than expected next year.
As a result, rates are expected to remain at least until 2023 in a range between 0 and 0.25%, at the low point where the institution had put them in emergency in March when the virus was wreaking havoc.
“There is not much more the Fed can do or say given the challenges facing the U.S. economy,” said Michael Hewson, senior market analyst for CMC Markets UK.
According to him, Powell’s announcements “obviously don’t mean that this new policy will be any more successful than the previous one and the market’s reaction more or less reflects that”.
Brexit: brewing in Europe
EU and UK chief negotiators on Brexit are meeting on Thursday in Brussels to try to avoid a breakdown in talks on the future trade relationship, despite the UK’s willingness to reverse the terms of the divorce.
The British David Frost is expected at 16:00 (14:00 GMT) at the European Commission by Frenchman Michel Barnier, at a time when fears of a “no deal” on the post-Brexit relationship seem stronger than ever.
The spokesman for the European executive, Eric Mamer, on Thursday rejected accusations by British Prime Minister Boris Johnson that Brussels is not negotiating in good faith and is threatening a food “blockade” on trade between Northern Ireland and Britain because of a lack of agreement at the end of the transition period at the end of 2020.
“Michel Barnier has shown (…) that even on extremely complex and politically sensitive issues, the Commission and the EU are negotiating in good faith,” he protested.
The negotiators are meeting at a time when Mr. Johnson is refusing to return to a controversial bill which, by the British government’s own admission, violates international law.
The text ignores some of the commitments made in the withdrawal agreement sealing the British departure, particularly with regard to the protocol designed to prevent the return of a border between Ireland and Northern Ireland.
Furious, the Europeans left until the end of the month in London to withdraw the problematic provisions, an ultimatum rejected by the British.
The British government “probably doesn’t know itself whether it wants an agreement or not,” a European diplomat told AFP.
“In the next two or three weeks, we will have a much better vision of what is feasible,” he said.