Global stocks mostly fall after Fed, Bank of England statements

AFP – Global stocks mostly fell Thursday as markets digested comments from the Federal Reserve that dimmed hopes for a cut in US interest rates.

Stocks retreated in London after the Bank of England pointed to the prospects of hiking interest rates more quickly than expected and in New York, where oil-linked shares were especially weak amid a slide in crude prices.

Traders were jolted by Fed boss Jerome Powell’s assessment Wednesday of recent weakness in US inflation as only "transitory."

The comments came after the Fed’s latest policy meeting and sank hopes that the US central bank would announce a rate cut later in the year.

The remarks from Powell also went against a call from US President Donald Trump to ease borrowing costs to help bolster the economy.

"The transitory Fed brought a transitory market pullback," said Adam Sarhan of 50 Park Investment. "It will pass."

Sarhan also rated Thursday’s decline, which followed Wednesday’s dip, as unsurprising given the market’s nearly unbroken run higher through the first four months of 2019.

"It’s normal to see some profit taking," Sarhan said.

Adding to fatigue with the rally are seasonal factors, with the market historically pulling back in May, a trend that inspired the adage: "Sell in May and go away."

– British rate hikes ahead? –

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Meanwhile, the Bank of England on Thursday raised its forecast for British economic growth this year to 1.5 percent from 1.2 percent, as stockpiling offsets lower business investment elsewhere ahead of Brexit.

Governor Mark Carney later told a news conference that rates would have to increase more quickly than markets currently anticipate — if the predictions proved correct.

"If something like this forecast comes to pass, we could see a period where the economy is growing and pressures continue to build despite this uncertainty," Carney said.

"If a Brexit resolution is some form of arrangement with some smooth resolution to it, it will require rate increases, and more frequent rate increases than the market currently expects," he added.

The pound strengthened somewhat against the euro, but fell against the dollar, while London’s FTSE 100 declined 0.5 percent.

Oil prices meanwhile extended losses Thursday after data Wednesday showed US crude inventories and production had jumped.

"Oil has sold-off on the back of yesterday’s Energy Administration Information report, which showed that US oil inventories surged by 9.9 million barrels –- its largest since September 2017," noted David Madden, analyst at CMC Markets UK.

Markets are also looking ahead to the US government jobs report for April, due out on Friday.

Analysts expect the US economy added another 200,000 jobs last month while the unemployment rate held steady at 3.8 percent.

 – Key figures around 2050 GMT –

New York – Dow: DOWN 0.5 percent at 26,307.79 (close)

New York – S&P 500: DOWN 0.2 percent at 2,917.52 (close)

New York – Nasdaq: DOWN 0.2 percent at 8,036.77 (close)

London – FTSE 100: DOWN 0.5 percent at 7,351.31 (close)

Frankfurt – DAX 30: FLAT at 12,345.42 (close)

Paris – CAC 40: DOWN 0.9 percent at 5,538.86 (close)

EURO STOXX 50: DOWN 0.7 percent at 3,488.93 (close)

Hong Kong – Hang Seng: UP 0.8 percent at 29,944.18 (close)

Shanghai – Composite: Closed for holiday

Tokyo – Nikkei 225: Closed for holiday

Euro/dollar: DOWN at $1.1173 from $1.1196 at 2100 GMT

Pound/dollar: DOWN at $1.3034 from $1.3050

Euro/pound: DOWN at 85.73 from 85.79 pence

Dollar/yen: UP at 111.50 from 111.38

Oil – Brent Crude: DOWN $1.43 at $70.75 per barrel

Oil – West Texas Intermediate: DOWN $1.79 at $61.81 per barrel

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