New Fed Chief Sees Interest Rates Continuing To Rise As Economy Strengthens

Two Reasons Why the US Dollar Will fall, Despite Powell's Short-Term Boost
Jay Powell Is Janet Yellen's Trap Queen
Author

03 March, 2018

Last year, the dollar index fell nearly 10 percent, its steepest plummet for more than a decade.

The S&P 500 Index, underlying reference of the $275bn SPDR S&P 500 ETF (SPY US), fell 10% between 26th January and 8th February.

The Dow was down by 380 points Wednesday in volatile trading, with markets falling sharply towards the close of trading. It had only four such days previous year.

MSCI's gauge of stock performance in 47 countries shed 0.88 percent.

The S&P 500 Index sank to session lows and fell below its 100-day moving average, while the Dow Jones Industrial Average dropped more than 500 points after the USA president added to earlier confusion on the fate of proposed tariffs by announcing the levies in a meeting with industry executives.

As a candidate, Trump campaigned on an "America First" trade policy, and a big fear for investors has been that increasingly nationalistic governments will impose barriers that hurt the global economy and trade, as well as profits for US exporters. Such action, and the risk of retaliation by trading partners, could cloud the USA economic outlook and derail the global recovery now benefiting the United States.

ANALYST INSIGHT: Trump's tariff plan "is bad policy at a bad time and will only add to the risk of a trade war", said Shane Oliver, head of investment strategy at AMP Capital in Sydney. He vowed that "the European Union will react firmly and commensurately to defend our interests".

U.S. steelmakers jumped on the news, with AK Steel Holding up 9.7 percent, U.S. Steel Corp gaining 7.1 percent and Nucor rising 2.85 percent. But shares of companies that use lots of steel fell, as did exporters. Aerospace giant Boeing lost $12.52, or 3.5 percent, to $349.69.

88, while the tech-rich Nasdaq Composite Index dropped 0.5 percent to 7,240.53.

Name SearchWatch Service' Jerome Powell told Congress Tuesday that the outlook for the USA economy "remains strong" despite the recent stock market turbulence, keeping the central bank on track to gradually raise interest rates.

Macron urges truce in Syria's Eastern Ghouta after bombardment escalation
UNICEF said it issued this blank statement because "we no longer have the words to describe children's suffering and our outrage". However, a rebel group formerly affiliated with al Qaeda is not included in the truce and has a small presence there.

Powell told Congress that there was no evidence that the USA economy is now overheating.

Referring to the wild swings in the stock market that occurred earlier this month, Powell said the Fed does "not see these developments as weighing heavily on the outlook for economic activity, the labor market and inflation".

Investors have feared that recent months of solid economic growth - seen in lower unemployment and wage growth - could force the Fed to raise rates more aggressively to prevent the economy from overheating.

That's why, for now, Powell believes the right course is for the Fed to raise rates gradually to help extend the nine-year economic expansion.

Investors have begun to worry that the Fed might accelerate the pace of its credit tightening if inflation, which has been dormant for years, starts to show signs of accelerating.

Dental supplies maker Patterson Companies plunged 22 percent after reporting weak earnings for the latest quarter.

That is substantially more than the £10.75 per share or £11.4 billion that Fox has offered for the 61 percent of Sky it does not already own. Brent crude lost 0.1 percent to $64.66 per barrel.

CURRENCIES: The dollar inched up to 106.91 from 106.66 yen late Wednesday.

Data showing the currency bloc's manufacturing boom slowed a little further last month added to the downbeat mood, helping send the euro to as low as $1.2162, its weakest since January 12.

France's CAC 40 fell 1.1 percent and Germany's DAX was down 2 percent.


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