US Treasury Secretary Steve Mnuchin has been central to the US rescue packages. Photo / NYT
US Treasury Secretary Steve Mnuchin has been central to the US rescue packages. Photo / NYT
US stocks dipped and European indexes were unsteady Tuesday as investors remained jittery following a period of staggering volatility in financial markets in the wake of the coronavirus pandemic.
The S&P 500 dropped less than 1 per cent, and stocks in Europe pared most of their early gains.
Although theworst of the recent swings in asset prices seem to have ended, financial markets are trying to find a footing even as the number of coronavirus cases climb. Even as stocks rebounded well off their lowest point of the month — after a surge last week — March is likely to be the worst month for the S&P 500 since October 2008, when investors feared a collapse of the economy in the wake of the global financial crisis.
For other financial markets, the damage has been even more severe. Oil prices are down more than 50 per cent this month, and other commodities have also slumped, reflecting expectations for a global economic slowdown.
As consumers stay home and factories shut down, millions of workers have lost their jobs. Wall Street economists and analysts continue to downgrade expectations for the economy, even after lawmakers in Washington enacted a US$2 trillion spending plan.
Goldman Sachs, for example, now expects US economic output to plunge at an annualized rate of 34 per cent in the second quarter. The unemployment rate will hit 15 per cent, the bank said in a research note Tuesday.
Here's how major benchmarks have done in March, through Monday:
• S&P 500 down 11 per cent. • Dow Jones industrial average down 12 per cent. • FTSE 100 in Britain down 15 per cent. • Nikkei 225 in Japan down 10.5 per cent. • Brent crude futures down 55 per cent.
The Fed tries to ease Treasury markets by making dollars available globally.
The Federal Reserve on Tuesday unveiled a new program that will let foreign central banks swap out their Treasury securities for dollars in short-term agreements.
The goal is to prevent foreign nations from selling their Treasury holdings in a scramble to acquire dollars. By stopping fire sales, the effort could help to ease strains on the Treasury market, which is the backbone of the broader financial system.
"They don't want foreign central banks selling Treasurys into very illiquid markets," said Gennadiy Goldberg, a market strategist at TD Securities, noting that some needed to sell Treasurys to manage their reserves and stabilize their currencies.
The new program will allow foreign central banks with accounts at the Federal Reserve Bank of New York to enter into overnight repurchase agreements, swapping out security holdings for needed dollar funding.
While the Fed has currency swap lines in place — through which foreign central banks can temporarily exchange their currencies for dollars — those only exist with 14 counterparts.
This new effort, available April 6, could widen that scope, allowing the Fed to funnel funding into economies where it has fewer long-standing and deep relationships with partner central banks.
"So many countries are dependent on dollar financing — the Fed is the dollar-maker of last resort," said David Beckworth, a Fed scholar at the Mercatus Center, noting that foreign central banks including China's have been left out. "It's plugging the holes of who has access."
Walmart says it will provide face masks to workers.
Walmart, which has seen a surge in business during the pandemic, said it would provide masks and gloves to workers and check their temperatures when they arrive at work.
Facing increasing criticism from workers and labour rights groups, Walmart said it would begin providing "high quality" masks to any staff member who wanted one.
Additionally, the company will begin taking the temperatures of employees as they show up to work at stores and distribution centres. Any employee with a temperature of 100 degrees or more will be sent home and cannot return to work until they are fever-free for at least three days.
"In listening to our associates and listening to our customers we felt this was a prudent step to take," Dan Bartlett, Walmart's executive vice president of corporate affairs, said in a call with reporters Tuesday morning.
Walmart said there had been an increase in the number of employees not coming to work since the pandemic hit, but its hiring spree helped alleviate some of the pressure. The company said it had hired 50,000 additional workers since March 19 — about 5,000 workers a day.
Walmart is the largest US private employer, with about 1.5 million employees. Its decision is a significant move in the retail industry, where millions of workers who have continued to come to work and interact with the public have expressed concerns about their safety. Some retailers have told their workers that they cannot wear masks for fear of upsetting customers.
Misleading coronavirus videos posted by Brazil's president are pulled down.
Facebook and Twitter took down posts featuring Brazil's president, Jair Bolsonaro, over the past two days after he claimed that the anti-malaria drug hydroxychloroquine was a "cure everywhere" for the coronavirus and called for an end to social distancing and shelter-in-place measures in Brazil.
Bolsonaro had posted the videos, which showed him talking to street vendors in the Taguatinga district of Brasília, Brazil's capital, to Twitter, Facebook and Instagram on Sunday. The New York Times has reported that there is no proof that the drug is effective against the virus.
Twitter took down the videos Sunday. The videos on Facebook and Instagram were taken down Monday evening. The companies said the posts violated their policies for spreading misinformation that could also lead to physical harm.
But the moves were unusual for the tech companies, which have long been hesitant to remove posts from world leaders, even when they walk the line of disinformation. The companies have said posts from world leaders are newsworthy.
Twitter deleted a post by President Nicolás Maduro of Venezuela last week in which Maduro promoted a "brew" that he claimed could cure coronavirus. President Donald Trump has previously posted that hydroxychloroquine showed "tremendous promise," which the social media companies said did not violate their policies because there was not a clear call to action that would cause the public any harm.
