- Asian and European stocks and US futures fell on Thursday after central banks warned of a global economic slowdown and Brexit uncertainty looked set to linger for another six months.
- The European Central Bank (ECB) pledged to leave interest rates untouched for at least the rest of 2019, and promised more support if the current slowdown continues.
- Minutes from the US Federal Reserve’s March meeting signalled the central bank would continue holding off on hiking interest rates.
- British Prime Minister Theresa May secured a six-month extension to the Brexit deadline, giving her until the end of October to win parliamentary support for her divorce deal with the EU.
Global stock markets slid on Thursday after European and US central banks raised the prospect of a worldwide economic slowdown and the UK signed up for another six months of Brexit uncertainty.
The European Central Bank (ECB) pledged to leave interest rates untouched for at least the rest of 2019, according to Bloomberg. President Mario Draghi warned of downside risks to the eurozone economy, but tried to reassure investors by promising more support if the current slowdown continues.
Meanwhile, minutes from the US Federal Reserve’s March meeting signalled the central bank would continue to hold off on hiking interest rates, given the prospect of a global slowdown in the next few years. Separately, US consumer prices increased by the most in 14 months in March, according to Reuters.
“Global central banks sitting tight [and] keeping a patient wait-and-see approach is a positive backdrop for stocks,” said Jasper Lawler, head of research at London Capital Group. “However…the global growth slowdown story is a complication and is weighing on sentiment.”
Another complication for markets is the stubborn specter of Brexit. On Wednesday, European leaders granted Prime Minister Theresa May a further six months to win parliamentary support for her divorce deal to leave the European Union.
“The problem for traders and investors is that the extension…does not bring us any closer to a resolution,” said Neil Wilson, chief market analyst for Markets.com.
“The cliff-edge has simply been pushed back. We are in a period of peak uncertainty for UK politics and that won’t help investors pile back into UK assets.”
Here’s the market roundup as of 9.15 a.m. (9.15 a.m. ET):
Asian stocks retreated from close to eight-month highs. The Shanghai Composite Index slid 1.6%, Hong Kong’s Hang Seng dipped 0.8%, and the SZSE Component Index dropped by more than 2.5%.
European stocks were down in early trading, as Germany’s DAX fell 0.3%, and the Euro Stoxx 50 slipped 0.2%.
US stocks were set to open in the red with the Dow and Nasdaq futures down by about 0.1%. The S&P 500 is flat.
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