The central bank’s chairman Jerome Powell stressed the need for more stimulus from the government
Wall Street stocks finished mostly lower overnight despite the Federal Reserve kept interest rates low and offered a cautious but fairly upbeat outlook on the economy. Fed Chairman Jerome Powell stressed the need for more stimulus from the government, pointing to a still-high unemployment rate. As a result, the Dow Jones Industrial Average gained just 0.1% while the broad-based S&P 500 fell 0.5% and the Nasdaq Composite Index dropped 1.2%, reversing a two-day rally.
Asian markets followed suit and saw significant losses on Thursday after the Fed announcement assuring that interest rates would stay low in the United States, at least for the next three years. Stocks were sharply weaker in Hong Kong and subdued in China while in Japan, the Nikkei 225 index fell 0.67% despite the Bank of Japan left monetary policy unchanged and offered a more upbeat economic outlook.
In Europe, equities also declined on Thursday, with banks falling 1.8% to lead losses as all sectors slid into negative territory. Now, investors will be watching out for any policy guidance from the Bank of England later today. No changes to the bank’s monetary stance are expected during the meeting. The pan-European Stoxx 600 dropped 0.8% in early trade.
The dollar received a boost from the Fed-induced sell-off in stocks. However, the US currency failed to preserve the momentum, as both the euro and sterling have nearly erased intraday losses. As of writing, EURUSD was changing hands around the 1.18 handle while GBPUSD derived support from the 1.29 figure and is moving back toward the 1.30 psychological handle.
Meanwhile, oil prices are nearing the $42 handle after an earlier retreat to $41.50. Brent saw a massive two-day rally amid the news about another hurricane in the Gulf of Mexico. Also, traders were inspired by fairly positive industry data from the API and EIA. Now, the market focus shifts to the OPEC+ meeting due later today. The alliance will meet to review production policy and discuss compliance with deep production cuts.
