Powell said the central bank is shifting to a policy of “average inflation targeting”
Wall Street stocks finished mostly higher on Thursday after the Fed Governor unveiled a new framework that could keep interest rates lower for a longer period. Powell said the central bank is shifting to a policy of “average inflation targeting”, suggesting that monetary authorities will let inflation run moderately above its 2% goal for some time. As a result, the S&P 500 gained 0.16%, the Dow Jones Industrial Average climbed 0.56%, while the Nasdaq Composite fell 0.34% after a record winning streak seen earlier in the week.
Asian stocks traded on a mixed note today, with Japan’s Nikkei 225 shedding nearly 1.5% in the wake of reports that long-serving Prime Minister Shinzo Abe will step down due to his worsening health. Elsewhere, Hong Kong’s Hang Seng climbed 0.55%, the Kospi in Seoul added 0.39% while the Shanghai Composite index edged 1.60% higher on Friday.
European stock markets opened marginally higher but retreated soon after the opening bell as investor sentiment looked mixed following yesterday’s message from the Federal Reserve. Besides, investors proceeded to profit-taking in technology and healthcare stocks after the recent rally. On the data front, French consumer spending rose 0.5% in July, slowing from a surge of 10.3% in the previous month. On the negative side, Germany announced a ban on large events until the end of this year yesterday. On Friday, coronavirus cases in the country increased by 1,576 while the death count rose by three.
Meanwhile, the greenback remains under the selling pressure after volatile trading was seen yesterday. The greenback was disappointed by a new strategy unveiled by the central bank that will keep its interest rates lower for longer. Against this backdrop, EURUSD climbed back to the 1.19 area and could retarget the 1.20 psychological barrier if the dollar stays on the defensive in the short term. Later in the day, traders will focus on economic updates out of the United States including personal spending and income data.
