Asian stock markets declined in almost all major areas on Thursday, followed by the US where there was also a fairly significant recession, and deterioration of investor sentiment. Market participants were unpleasantly surprised by the final minutes of the meeting of the US Federal Reserve System which took place at the end of July. The document presents very gloomy prospects for the country's economic recovery and its further growth.
According to the document, the authorities believe that the coronavirus pandemic will seriously affect the economic development of the country, and its consequences have yet to be seen in full in the future. In general, the medium term will be associated with a fairly large number of risks, which will be difficult to cope with.
Japan's Nikkei 225 Index dropped 1%.
China's Shanghai Composite Index declined even more by 1.17%. The Hong Kong Hang Seng Index followed this negative trend and shed 2.07%. The main regulator of the country - the People's Bank of China - decided to keep the base interest rates at 3.85%. The PBC has kept everything as it is for the fourth time in a row, although it was previously reduced by 20 basis points to revive the economy of the country badly affected by the crisis caused by the coronavirus pandemic.
South Korea's Kospi Index became the leader in the fall in the Asian region: it sank 3.22% at once.
Australia's S & P / ASX 200 index declined moderately by 0.8%.
The US stock markets, on the other hand, closed Wednesday's trading depressingly after the publication of the minutes of the Federal Reserve meeting, which did not at all satisfy the expectations of market participants.
The Dow Jones Industrial Average closed Wednesday's trading with a drop of 0.31% or 85.19 points, which forced it to move to the level of 27,692.88 points.
The Standard & Poor's 500 Index parted with 0.44% or 14.93 points. Its current level was 3,374.85 points.
The Nasdaq Composite index fell by 0.57% or 64.38 points: its new level is at 11,146.46 points.
Market participants focused on corporate news about the growth of some of America's big companies and then turned their attention to the thorny problem of the fiscal stimulus package, which has not been resolved. However, there has been some progress, and the political impasse may be overcome in the near future.
Yet too much negativity and uncertainty came with the publication of the minutes of the July meeting of the US Federal Reserve. In particular, the document contains many references stating that the coronavirus crisin in the country will be quite difficult to overcome. Implementation of expanded economic support measures is necessary so that it can successfully cope with the difficulties and move on to recovery and growth. However, the document does not suggest specific measures, nor does it describe possible instruments of monetary policy that should be used to get out of the crisis.
The situation is aggravated by the still absent decision on the new financial incentive program. However, Democrats and Republicans have at least made statements that they are ready to seek consensus.
Another important problem is the conflict between Washington and Beijing, which has already led to the disruption of the negotiation process on a trade agreement between the countries. US President Donald Trump continues to accuse China of being responsible for the financial collapse that happened in the world against the backdrop of the COVID-19 pandemic.
European stock exchanges also faced the same situation. On Thursday morning, a reduction in the main stock indicators was noted. The US Federal Reserve Protocol, containing an extremely gloomy prospect for the development of the US economy, was also met with hostility.
The general index of large enterprises in the European region Stoxx Europe 600 fell significantly by 1.72%, which lowered it to 365.86 points.
The UK FTSE 100 Index declined 1.56%. The German DAX index sank even more by 1.65%. The French CAC 40 index led the fall and lost 1.73%. Spain's IBEX 35 had to give up 1.62%.
Investors in the European region also expect that the press will receive the minutes of the ECB meeting, which also took place back in July. However, after the Fed's protocol, the tension has seriously increased.
Meanwhile, the news that China and the United States may meet in the near future and discuss the details of their trade agreement somewhat softens the situation. Note that negotiations on this issue were previously disrupted.
In any case, the situation on stock exchanges is as unstable as the political and economic situation in the world.
