Equities, dollar slip as Fed rate path jitters build

Equities, dollar slip as Fed rate path jitters build

Andrew Cummings
March 21, 2018

Tech stocks under-performed in Europe as the sector fell 0.3%, taking its cue from Monday's falls for U.S. peers on the back of fears of stiffer regulation as Facebook came under fire following reports it allowed improper access to user data.

Policymakers are comfortable with market forecasts, including for a rate hike by the middle of 2019, and the debate is increasingly about the steepness of the rate path thereafter, as some want future expectations contained, given the slow rebound in inflation, five sources with direct knowledge of the discussion told Reuters.

It will also be the first press conference for new Fed Chair Jerome Powell.

The dollar edged 0.43 percent higher against a basket of currencies to 90.15, almost reversing a 0.5 percent drop the previous day thanks to a relief rally in sterling after a transition deal was announced and the euro's bounce.

Asia AM Digest USD Gains Ahead of Fed NZD Falls Before the RBNZ

The two-year USA treasury yield jumped to 2.3449 percent on Tuesday.

USA stocks finished higher as attention turns to the Fed statement and the policy for interest rates tomorrow.

"Euro/dollar is being buffeted by cross currents, especially as both central banks (Fed and the ECB) are normalizing policy but it needs an unexpected policy action to jolt markets out of current ranges", said Neil Jones, Mizuho's head of currency hedge fund sales in London. The FTSE 100 of the United Kingdom declined 0.32 percent and the SMI of Switzerland finished lower by 0.72 percent.

The technology index.SPLRCT rose 0.36 percent.

A surge in crude oil prices to a six-week high following a surprise decline in US inventories boosted energy stocks, which ended up 1.3 percent.

Crude oil futures extended gains after rising over 2% overnight as tensions between Iran and Saudi Arabia threatened supplies from the region.

The big four banks rose between 0.6 percent and 1 percent while mining heavyweight Rio Tinto ended on a flat note after ruling out special dividend before the company's half-year results in August.

TRI Pointe Group climbed 50 cents, or 3.1 percent, to $16.88 and D.R. Horton added $1.25, or 2.9 percent, to $44.43. The stock dropped $4.65, or 9.3 percent, to $45.28.

Facebook shares slumped 3.7 percent in premarket trading after reports that 50 million of its users' data had been misused by a political consultancy firm ahead of the 2016 USA election and Brexit vote.

The stock is down 11 percent from the all-time high it set February 1. Snap dropped 10 percent in a four-day losing streak that began last week, when pop star Rihanna called on her fans to delete the Snapchat app after an ad for game that made jokes about her assault in 2009 by her then-boyfriend Chris Brown. It gained $1.37, or 2.1 percent, to finish at $67.42 per barrel on Tuesday. Other social media companies in the US also finished the day lower on concerns that the government might enact new laws affecting their businesses.

Southwest Airlines (LUV.N) fell 6.2 percent after the carrier cut its forecast for a key revenue metric. The Australian dollar hit a three-month low of $0.7679 on Tuesday and last stood at $0.7686, having fallen 2.4 percent in the past week.

The yen was little changed at 106.37 to the dollar, with traders wary of any new developments in a cronyism scandal that has eroded support for Japanese Prime Minister Shinzo Abe. The euro rose to $1.2289 from $1.2253.

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