Wall Street gains modestly after Fed signals rates to hold steady for some time
Global equity markets rose on Wednesday after the Federal Reserve indicated interest rates would remain on hold for some time - a positive for risky assets - while oil prices fell after data showed an unexpected increase in U.S. crude inventories.
New projections showed 13 of the U.S. central bank’s 17 policymakers foresee no change in rates until at least 2021 as moderate economic growth and low unemployment are expected to continue through next year’s presidential election.
That outlook nudged stocks on Wall Street higher as investors await a decision on whether U.S. President Donald Trump would allow his promised new tariffs on almost $160 billion of Chinese goods to go forward on Sunday.
The projection of no rate hikes for the foreseeable future is phenomenal when U.S. monetary policy over the last few decades is considered, said Kristina Hooper, chief global market strategist at Invesco in New York.
“We shouldn’t treat that as boring or uneventful; this is actually very important. The bar is very high for any rate hikes,” she said.
Hooper said the Fed is the key factor that has been driving the stock market, in addition to U.S.-China trade relations that have been center stage for markets in recent weeks as negotiators try to hammer out a “phase one” deal.
“The Fed decision to sit on its hands and its outlook for 2020 should be positive for the stock market,” she said.
MSCI’s gauge of stocks across the globe. MIWD00000PUS gained 0.41%, climbing to within two points of its all-time high of 550.63. The pan-European STOXX 600 index rose 0.22%.
On Wall Street, the Dow Jones Industrial Average. DJI rose 29.58 points, or 0.11%, to 27,911.3. The S&P 500. SPX gained 9.11 points, or 0.29%, to 3,141.63 and the Nasdaq Composite. IXIC added 37.87 points, or 0.44%, to 8,654.05.
The 17-month trade war has roiled capital markets and crimped global growth, noticeably in China. Paramount in investors’ minds is the looming Dec. 15 U.S. deadline on tariffs, with no immediate clarity on what the decision will be.
After U.S. stocks set new highs two weeks ago and MSCI’s global gauge of equity performance neared its all-time peak, stocks have since trended downward as investors await news on the trade front.
“The market’s waiting for Godot, waiting on the tariffs,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
Confidence has grown as Sunday approaches that Trump will do something to keep the trade talks on track, which has increased risk-on sentiment in the market, Ghriskey said.
The White House’s top economic and trade advisers are expected to meet with Trump in the coming days on a decision, a source told Reuters.
Jamie Dimon, chief executive at JPMorgan (JPM.N) and chairman of the Business Roundtable, a trade group of top U.S. CEOs, said he expected a phase-one trade deal to be finalized and said not doing so would be “negative” for markets.
New projections showed 13 of the U.S. central bank’s 17 policymakers foresee no change in rates until at least 2021 as moderate economic growth and low unemployment are expected to continue through next year’s presidential election.
That outlook nudged stocks on Wall Street higher as investors await a decision on whether U.S. President Donald Trump would allow his promised new tariffs on almost $160 billion of Chinese goods to go forward on Sunday.
The projection of no rate hikes for the foreseeable future is phenomenal when U.S. monetary policy over the last few decades is considered, said Kristina Hooper, chief global market strategist at Invesco in New York.
“We shouldn’t treat that as boring or uneventful; this is actually very important. The bar is very high for any rate hikes,” she said.
Hooper said the Fed is the key factor that has been driving the stock market, in addition to U.S.-China trade relations that have been center stage for markets in recent weeks as negotiators try to hammer out a “phase one” deal.
“The Fed decision to sit on its hands and its outlook for 2020 should be positive for the stock market,” she said.
MSCI’s gauge of stocks across the globe. MIWD00000PUS gained 0.41%, climbing to within two points of its all-time high of 550.63. The pan-European STOXX 600 index rose 0.22%.
On Wall Street, the Dow Jones Industrial Average. DJI rose 29.58 points, or 0.11%, to 27,911.3. The S&P 500. SPX gained 9.11 points, or 0.29%, to 3,141.63 and the Nasdaq Composite. IXIC added 37.87 points, or 0.44%, to 8,654.05.
The 17-month trade war has roiled capital markets and crimped global growth, noticeably in China. Paramount in investors’ minds is the looming Dec. 15 U.S. deadline on tariffs, with no immediate clarity on what the decision will be.
After U.S. stocks set new highs two weeks ago and MSCI’s global gauge of equity performance neared its all-time peak, stocks have since trended downward as investors await news on the trade front.
“The market’s waiting for Godot, waiting on the tariffs,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
Confidence has grown as Sunday approaches that Trump will do something to keep the trade talks on track, which has increased risk-on sentiment in the market, Ghriskey said.
The White House’s top economic and trade advisers are expected to meet with Trump in the coming days on a decision, a source told Reuters.
Jamie Dimon, chief executive at JPMorgan (JPM.N) and chairman of the Business Roundtable, a trade group of top U.S. CEOs, said he expected a phase-one trade deal to be finalized and said not doing so would be “negative” for markets.
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