Stocks fell across the world on Monday after lawmakers in Washington failed to pass a massive funding package designed to tackle the economic fallout of the coronavirus pandemic.
In the US, stocks were mixed even after the Federal Reserve vowed to purchase unlimited quantities of US government bonds and other securities.
The political stalemate raised the alarm of investors, who had been hoping that Democrats and Republicans would on Sunday agree on the stimulus measures needed to shield the world’s largest economy.
The Fed on Monday said that it was “committed to using its full range of tools to support households, businesses, and the US economy overall in this challenging time,” and said it would establish a lending programme to support small and medium-sized businesses.
The package was announced after the Fed’s third emergency meeting in recent weeks.
“While US politicians continue to procrastinate, the US central bank has decided to double down, and go all in, by not only helping Wall Street, but by also helping to keep Main Street on its feet as well,” said Michael Hewson, the chief market analyst at CMC Markets UK.
Democrats in the US Senate blocked the $2tn (£1.6tn) government rescue package, saying it did not adequately protect workers and denouncing it as a corporate giveaway that failed to impose enough restrictions on big business bailouts.
“If they procrastinate too much ahead of this week’s jobless claims and next week’s payrolls numbers, then the long-term economic damage could well be much more significant and long term. These jobs numbers are expected to be ugly. Right now, US politicians are fiddling while the US economy burns,” said Hewson.
The losses in Europe and the US followed a similarly weak trading session in Asia.
Futures were also pointing to a lower open for US stocks on Monday.
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