Global stocks drop and the dollar rises after the Fed warns the US economic recovery will stall without further stimulus

Global stocks drop and the dollar rises after the Fed warns the US economic recovery will stall without further stimulus

Federal Reserve Board Chairman Jerome Powell testifies during a hearing on "The Semiannual Monetary Policy Report to the Congress," in front of the Senate Banking, Housing and Urban Affairs Committee in the Dirksen Senate Office Building on February 12, 2020 in Washington, DC.
Sarah Silbiger/Getty Images

Stocks were a sea of red on Thursday after investors were spooked by warnings from a number of Federal Reserve speaker that US economy needs stimulus to continue to recover.

Federal Reserve Chairman Jerome Powell said more stimulus is needed while the Fed's vice-chair Richard Clarida said Wednesday the pandemic has put the US in a "deep hole" and the economy needed Congress to approve additional fiscal support.A 

The sell-off in the broader market indices caused a rise in the dollar.A 

Jeffrey Halley, senior market analyst at OANDA, said: "It is clear from the price action across markets overnight that the slump in equities has sparked a general move out of other asset classes and into US cash."A 

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Global stocks dropped on Thursday after a number of Federal Reserve officials warned the US economy would falter without further stimulus measures, driving investors out of risky assets, including gold and silver, and into the safety of cash, which boosted the dollar.A European shares fell, pushing the Stoxx 600 down 1%. Technology, oil and gas and banks were among the biggest sector losers, with German semiconductor maker Infineon down 1.5%, Deutsche Bank off 1.4%, while in London, oil producer BP lost 4.0%. Asian stocks also fell overnight, with Japan's Nikkei down 1.1% and the Shanghai Composite down 1.7%.US futures were also pointing to a modest drop at the open between 0.1-0.6%, following on from Wednesday's steep declines.A Federal Reserve Chairman Jerome Powell urged Congress on Wednesday to agree to inject more cash into the economy. "We've basically done all the things we could think of," he said, referring to the central bank's policy of keeping interest rates near zero and pumping cash into the financial system.A 
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