Wall Street Rides Fed Rate Cut Hint Higher
Sumaira FH Published July 12, 2019 | 10:21 PM
Wall Street pushed higher into record territory Friday after Federal Reserve chief Jerome Powell all but flicked the switch on a US interest rate cut at the end of the month
After big losses at the start of the week, trading floors have been much more upbeat since a two-day congressional testimony in which Powell hinted at a possible reduction in borrowing costs, with markets now betting on the size of the anticipated cut.
After the Dow stocks index pushed above 27,000 points for the first time on Thursday, it pushed further into record territory on Friday, as did the broader S&P 500. The tech-heavy Nasdaq stayed close to record highs.
"Dealers remain divided as to the size of the (Fed) cut... but the view across the board is that monetary policy will be loosened," said analyst David Madden at CMC Markets UK.
While the positive sentiment initially filtered through to Asia and Europe on Friday, the momentum petered out in late European trading.
For Chris Beauchamp, chief market analyst at online trading firm IG, "the question is now whether equities can survive an earnings season that at present is forecast to show the second quarter of declines in earnings." Further stock market gains came despite unease caused by US President Donald Trump accusing China of backsliding on a trade promise -- just days after the two sides tentatively began telephone talks on resolving their tariffs war.
Meanwhile, China's economy grew at its slowest rate in nearly three decades in the second quarter, hit by the US-China trade war and weakening global demand, according to an AFP survey of analysts.
The world's second largest economy expanded 6.2 percent in April-June, the poll of 10 economists estimated, ahead of the official release of gross domestic product figures Monday.
- Oil prices rise - Elsewhere, geopolitical tensions after armed Iranian boats threatened a British oil tanker earlier in the week provided support for oil prices, although gains were limited by longer-term oversupply concerns.
Iran's menacing of the BP supertanker on Wednesday appeared to be in retaliation for Britain's seizure of the Iranian Grace 1 tanker off Gibraltar on July 4.
"With Iran seeking retribution for the UK's actions around Gibraltar, there is a distinct possibility that we could see an upside shock to prices," said IG trading group analyst Joshua Mahony.
"That being said, in the absence of such shocks, US production is likely to remain a drag on prices." Iran's Revolutionary Guards denied involvement in the British Heritage incident but said the United States and Britain would "strongly regret" British detention of the fully-loaded Iranian tanker off Gibraltar for violating sanctions on Syria, allegedly the planned recipient of its cargo.
Britain said Friday it will send a second warship to the Gulf, while the Pentagon said Thursday it was discussing military escorts for vessels in the Gulf.
But the rises in oil prices as a result of the incident have been capped by an oversupplied oil market, according to traders.
And the IEA on Friday said the recent decision by oil producing countries to prolong cuts in output will not fundamentally change the outlook for the market.
"The widely-anticipated decision by OPEC+ ministers to extend their output agreement to March 2020 provides guidance but it does not change the fundamental outlook of an oversupplied market," the International Energy Agency said in its latest monthly report.
At a meeting two weeks ago in Vienna, OPEC countries and other oil producers such as Russia agreed to prolong by nine months daily output cuts aimed at supporting prices and soaking up excess supplies.
But supply is currently well in excess of demand, said the Paris-based institution that provides advice to oil-consuming nations.
Related Topics
Recent Stories
IHC adjourns PTI founder, Qureshi's appeal till Thursday
CDWP recommends 3 projects to ECNEC for approval
Tarar assures APNS to resolve issues of newspaper industry
Pakistan urged to capitalize on economic stability, for Tobacco Tax Reforms
N. Macedonia polls set to upend ties with EU neighbours
Croatia's ruling party reaches coalition deal with right wing
Bayern coach Tuchel makes three changes for Madrid showdown
Olympic flame arrives on French soil for Paris Games
Punjab Finance Minister announces expansion of Social Protection Authority's man ..
Kenya inks deal to end doctors' strike
Brazil flooding death toll reaches 100
Lebanon security source says five killed in Israeli strikes on south
More Stories From Business
-
CDWP recommends 3 projects to ECNEC for approval
5 hours ago -
Pakistan urged to capitalize on economic stability, for Tobacco Tax Reforms
5 hours ago -
Punjab Finance Minister announces expansion of Social Protection Authority's mandate
5 hours ago -
Delegation of dairy industry called on Finance Minister
6 hours ago -
Uzbek FM to deliberate matters of bilateral interest, trade augmentation
6 hours ago -
Pakistani fishing industry attracts Chinese investors: PCJCCI
7 hours ago
-
LCCI, PVTC to make joint efforts to bridge skill gap in industrial sector
7 hours ago -
French ambassador meets Finance minister
7 hours ago -
Wheat purchase record registered properly; growers being paid within 24 hours
7 hours ago -
Govt ensuring one stop solution to industrialists: Ikramullah Dharejo
7 hours ago -
Pak-Qatar Family Takaful achieves Rs156.3 turnover in 2023
7 hours ago -
First phase of Tajir Dost Scheme limited to only registration: FBR
8 hours ago