Global Stocks Steady but Dollar Falls After President Trump's Fed Remarks
August 21 2018 - 4:54AM
Dow Jones News
By Georgi Kantchev
Global stocks inched higher and the dollar fell Tuesday, as
investors parsed the latest signals in the trade spat between the
U.S. and China and President Trump's comments about the Federal
Reserve.
The Stoxx Europe 600 was up 0.1% in early morning trade. Most
Asian markets were higher while futures pointed to a broadly flat
opening for the S&P 500.
The dollar fell against other major currencies after Mr. Trump
criticized the Federal Reserve for raising interest rates.
The Trump administration is moving closer this week to levying
tariffs on $200 billion of Chinese goods, or nearly half of Chinese
imports, despite the start of a fresh round of talks between the
two countries to settle the trade dispute. The U.S. is considering
tariffs of either 10% or 25% on thousands of categories of
products.
The moves exacerbate concerns among investors that the world's
two biggest economies could descend further into a trade fight.
Rising frictions in international trade this year have rocked
global markets, adding to one of their most volatile stretches in
years.
"Trade has been and continues to be a cap on the market," said
Lindsey Bell, investment strategist at CFRA Research. "Potential
talks are positive but if they don't lead to resolutions, that's a
big risk for the market."
Still, the U.S. stock market has been resilient, with the
S&P 500 just 0.6% off its all time high, amid strong corporate
earnings and solid economic data.
"The economy looks good and consumers feel confident, which is
supporting the market," Ms. Bell said.
The dollar, meanwhile, was under pressure after Mr. Trump said
in a Reuters interview that he was "not thrilled" with Fed Chairman
Jerome Powell and said he expected "more help" from the central
bank.
Analysts said the impact of Trump's comments is unclear.
"Given that the Fed is an independent institution, explicit
comments about interest rates may have the opposite effect as
policy makers led by Powell could be more inclined to tighten
monetary policy to defend their credibility," strategists at
Rabobank wrote in a note to clients.
The Fed has raised interest rates twice this year and has
penciled in two more quarter-point interest-rate increases in 2018
and three more in 2019. Higher rates tend to boost the dollar by
making the currency more appealing to yield-seeking investors.
Later this week, investors will be watching for minutes from the
Fed's August meeting as well as the annual Jackson Hole symposium
of global central banks.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, was down 0.2%. The 10-year U.S. Treasury yield
rose to 2.833%, compared with 2.823% on Monday. Yields move
inversely to prices.
Investors continued to monitor developments in Turkey, where the
lira's swift falls in recent weeks have sparked concerns about
broader emerging markets contagion. The currency was down 0.4%
against the dollar on Tuesday.
In Asia, Japan's Nikkei Stock Average finished up 0.1% while
Hong Kong's Hang Seng was up 0.5%
In commodities, Brent crude, the global oil price benchmark, was
up 0.2% while gold was up 0.5%.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
(END) Dow Jones Newswires
August 21, 2018 04:39 ET (08:39 GMT)
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