Published: Fri, June 07, 2019
Markets | By Otis Pena

Stocks jump as Fed’s Powell suggests rates could come down

Stocks jump as Fed’s Powell suggests rates could come down

President Trump has called on the Central Bank to cut interest rates, saying there is "no inflation" and the USA economy would be "like a rocket ship" if the bank lowered rates.

However, a new World Bank report showing reduced global growth forecasts for the year suggested that investors could expect the trade headwinds to continue for some time yet.

Investors are increasingly betting the Fed will cut interest rates this year and a few policymakers have hinted this could be in the cards.

The world economy is now expected to expand by 2.6% this year, three tenths of a percentage point lower than the January forecast, and well below the 3% growth of 2018, according to the Global Economic Prospects report.

Japan's Nikkei 225 index jumped 1.8% to 20,773.86 while the Hang Seng in Hong Kong advanced 0.7% to 26,953.77.

Fed Chairman Jerome Powell did not question the market rethink of the USA interest rate trajectory on Tuesday.

Other metals saw mixed trading, with July copper HGN19, -0.04% 0.7% higher at $2.669 a pound.

Analysts at Morgan Stanley believe the US economy could be barrelling toward recession unless the trade disputes are resolved.

With free beers, Trump brothers thank devoted Irish village
Varadkar quickly retorted, "I think one thing we want to avoid, of course, is a wall or border between us". Corbyn had Monday boycotted the State Banquet given by the Queen for the U.S.

The S&P 500 shed more than 6% in May as investors feared a global growth slowdown while trade tensions ramped up between the United States and China and the United States and Mexico.

President Donald Trump had said he would likely go ahead with new tariffs on Mexican imports next week, despite some opposition from his own party. Republican senators expressed opposition to the proposed tariffs.

"Given the fact there's more than a 95% probability of a rate cut baked into fixed income it's nice to hear the Fed say it will wait for the economy to tell it what to do".

Looser monetary policy would, on its face, provide a jolt to commodity markets, boosting economic activity while also putting downward pressure on the USA dollar. In addition to Powell's statement, the activity in the bond market has been pointing to a rate cut, with the benchmark ten-year treasuries falling to slightly above the 2.0% mark.

US crude retreated 0.6% to $53.16 a barrel.

European markets made fractional gains in early trade, with London, Frankfurt and Paris edging up 0.1 percent. Brent crude oil, the worldwide standard, gave up 28 cents to $61.69 per barrel. Yesterday so far, they peaked at $1 348,90, which would also be the highest intra-day level since February, but prices haven't settled at a level that high since April 18, 2018. On Tuesday as gold futures settled, the ICE U.S. Dollar Index DXY, -0.02% was almost flat at 97.160.

"From a technical point of view the recovery above the psychological threshold of $1,300 represents a first positive element, while the strength shown in the last 48 hours, with the rally up to $1,330 is confirming the bullish scenario", wrote Carlo Alberto De Casa, chief analyst at broker ActivTrades.

Like this: