Investors now project a longer wait for the first rate cut from the Federal Reserve
Wall Street stocks finished lower on Thursday after the data showed that economic growth in the US is slowing and inflationary pressures are persisting. The US GDP slowed to 1.6% in the first quarter, a much weaker pace than expected. At the same time, the annualized GDP chain price jumped from 1.6% up to 3.1%. Against this backdrop, investors now project a longer wait for the first rate cut from the Federal Reserve. The S&P 500 fell 0.5% after paring an earlier drop of more than 1.5%. The Dow Jones Industrial Average lost 1%, and the Nasdaq Composite shed 0.6%. For the week, the S&P 500 is up 1.6%, the Dow gains just 0.3%, and the Nasdaq is up 2.2%.
In Asia, equities were mostly higher ahead of the weekend despite worries about inflation in the US. Japan’s benchmark Nikkei 225 added 0.84% after the Bank of Japan ended a policy meeting with no major changes, keeping its benchmark interest rate steady after raising the key rate in March. The central bank also lowered its growth forecasts for the Japanese economy. MSCI’s broad index of global stocks was 0.17% higher for the day, but down 3.3% for the month. South Korea’s Kospi rose 1%, while Hong Kong’s Hang Seng index added 2.12%.
European stocks opened higher on Friday, regaining the bullish momentum after yesterday’s dip. The pan-European benchmark Stoxx 600 index was up 0.6% in early deals. US stock index futures rebounded as well. Now, investors are awaiting the release later in the day of the Fed’s preferred gauge of inflation, personal consumption expenditures index. Strong numbers could further dent expectations for how many cuts the bank will make this year.
In currencies, Japan’s yen hit a fresh 34-year low after the Bank of Japan kept monetary policy loose at its latest policy meeting. USDJPY extended gains to the 156.80 zone, with traders now speculating that Japanese authorities might intervene to support the currency. As for the greenback itself, the USD index keeps trending lower, albeit the selling pressure looks limited at this stage. The dollar has settled around 105.55 on Friday after a failure to hold above 106.00 earlier in the week.