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Fitch Ratings, in its latest global economic outlook report, revised down its global GDP estimate for 2020.

Key takeaways

“See a huge contraction for the global economy.

Global GDP forecast now revised to -3.2% vs. -1.7% back in April.

Most of the contraction will be in Q2.

We have revised down our growth forecasts for several markets including the US, Italy, the UK, Germany, Japan, Brazil, Mexico, Nigeria, Egypt, Indonesia, the Philippines, Turkey and Poland.

Forecast a recovery of 3.6% in 2021.”

Market reaction

Markets are witnessing a cautious optimism, with the Asian markets flashing green, taking the positive lead from Wall Street overnight.

However, the US stock futures and Treasury yields are falling, suggesting Asian traders are not buying into the overnight optimism about the Moderna vaccine amid trade tensions.

The US dollar index is off the multi-day lows, aiding the tepid bounce in USD/JPY towards 107.50 while AUD/USD is consolidating the gains below 0.6550.