Global stocks mostly rise ahead of US Fed release

Andrew Cummings
August 22, 2019

Fed officials also said trade uncertainties were an important factor in the recent drop in fixed business investment in the USA, a key factor that Mr. Trump and his economic advisers have pointed to as evidence that the economy is stronger now than under President Obama. Wake up Federal Reserve.

Powell suggested that the July rate cut should not be seen as "the beginning of a lengthy cutting cycle", but President Donald Trump has been putting intense pressure on the Fed to continue cutting rates.

"When you think about central banks and what did they did over the last recession, there's very little room left in the interest rate structure, unless you go negative to help the consumers and business - and their balance sheets are pretty big compared to 2007".

Financial shares have led USA stocks lower to end a three-day rally as investors await comments from Federal Reserve chair Jerome Powell at the end of the week.

The Shanghai Composite Index lost 0.5 points to 2,880.52 and Tokyo's Nikkei 225 shed 0.4 percent to 20,603.43. Hong Kong's Hang Seng inched up 0.2% to finish at 26,270.04.

Wall Street and Trump "are anticipating that Mr Powell will signal that the Federal Reserve is about to embark on a reinvigorated wave of easing, following its global peers", said Jeffrey Halley, OANDA senior market analyst for Asia-Pacific.

Seoul's Kospi gained 0.5 points to 1,961.02 while Sydney's S&P-ASX 200 fell 1.1% to 6,473.00.

The Dow snapped a three-day winning streak and finished 173 points lower on Tuesday.

The yield on 10-year Treasuries dipped to 1.58%.Australia's 10-year bond yield added two basis points to 0.95%.Germany's 10-year yield climbed two basis points to -0.67%. Taiwan and Indonesian markets advanced while New Zealand and Singapore retreated. The Dow Jones Industrial Average slid 0.7 percent to 25,962.44. The Nasdaq composite dropped 0.7% to 7,948.56.

The US market has been volatile this month as investors try to parse conflicting signals on the US economy and determine whether a recession is on the horizon. It comes at a time of concern that the risk of a recession over the next year or two is rising, in part because of Trump's aggressive use of tariffs against China and other key trading partners.

Some chipmakers rose on Monday's news the Trump administration is delaying enforcement of export curbs on USA technology sales to Chinese telecom equipment maker Huawei Technologies Ltd. Qualcomm added 1.6%.

Prior to Tuesday's session, United States stocks had recovered most of their losses from a steep sell-off last Wednesday, which was triggered by a brief inversion of the yield curve between 2-year and 10-year Treasuries, widely considered a harbinger of a recession.

ENERGY: Benchmark U.S. crude gained 12 cents to $56.25 per barrel in electronic trading on the New York Mercantile Exchange.

The S&P 500 financial index dropped 1.4 per cent and the group weighed most heavily on the benchmark index among its major sectors, which all registered losses. Brent crude, used to price worldwide oils, rose 96 cents to $60.99 per barrel in London. The euro was little-changed at $1.1099.

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