Home Forex Markets close lower on grim economic forecasts

Markets close lower on grim economic forecasts

by Jonathan Adams
economic forecasts

Major European markets were impacted by the pessimism from economists, continuing this week’s decline

A subdued trading session saw the major markets close in the red as the latest set of economic forecasts predicting a significant coronavirus hit weighed on cautious traders.

Traders swallowed the Organisation for Economic Co-operation and Development’s (OECD) pessimistic outlook – which predicted a 6% global economic contraction – as they waited for the latest update from the US Federal Reserve.

The FTSE 100 closed 6.59 points lower at 6,329.713p at the end of trading on Wednesday.

David Madden, market analyst at CMC Markets UK, said: It has been a quiet trading session as dealers are content to sit on their hands and wait for the Fed rate decision at 7pm. Volatility has been low as many traders are playing the wait and see game.

Earlier on Wednesday, the OECD warned that the world economy could shrink by 7.2% should there be a second wave of infections.

Madden added: The pessimistic outlook has weighed on market sentiment as the major indices are set to finish in the red.

The major European markets were all impacted by the wave of pessimism from economists, continuing this week’s decline.

The German Dax decreased by 0.7%, while the French Cac moved 0.82% lower.

In the US, the Dow Jones dipped as trading sentiment wilted amid a cautious mood ahead of the Fed’s update.

Meanwhile, sterling moved marginally higher as it benefited from weakness in the dollar. The value of the pound rose 0.22% versus the US dollar at 1.275 and was up 0.02% against the euro at 1.122.

Aerospace and travel firms once again tumbled lower as concerns over the loosening of current restrictions weighed on investors.

In company news, Just Eat Takeaway led the fallers in the FTSE 100 after the food delivery business confirmed it was closing in on a move to merge with US rival Grubhub.

The businesses would combine without any cash changing hands by simply swapping shares, Just Eat Takeaway said.

Shares in Just Eat Takeaway closed 1,148p lower at 7,626p at the close of play.

Fashion chain Quiz saw shares improve after it said it is placing the division that runs its 82 standalone stores into administration as part of a restructure.

It said the move, that will help to slash its rent bill, will result in 11 permanent store closures and 93 job losses.

Shares moved 0.25p higher at 7p on Wednesday.

Elsewhere, landlord Shaftesbury saw shares slip after it tumbled to a loss as it said the valuation of its property dropped by more than £300 million.

The London-based property owner said it faces a pre-tax loss of £287.6 million in the six months ending March 31. Shares fell by 33p to 615p.

The price of oil bounced back into positive territory after the latest EIA announcement reported that oil stockpiles jumped by 5.7 million barrels.

The price of a barrel of Brent crude oil increased 0.79% to 40.98 US dollars.

The biggest risers on the FTSE 100 were British American Tobacco, up 98p at 3,124p, Rentokil, up 14.8p at 488.2p, Hikma, up 69p at 2,353p, and Hargreaves Lansdown, up 49.5p at 1,691p.

The biggest fallers of the day were Just Eat Takeaway, down 1,148p at 7,626p, Carnival, down 147p at 1,354.5p, IAG, down 22.9 at 288.3p, and Melrose, down 9.7p at 123.8p.

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