The Federal Reserve lowered interest rates by 0.25% for the first time since December 2008. But at the press conference following the meeting of the Federal Open Market Committee, Fed Chairman Jerome Powell said that this rate cut was a timely adjustment and not necessarily the beginning of a prolonged cycle of rate cuts.
Wall Street stocks fell sharply during Powell’s intervention because traders interpreted that there would be no further rate cuts this year. The Fed president cited the global economic slowdown, trade war and moderate inflation as reasons to reduce interest rates by 25 basis points.
Powell also spoke about Donald Trump’s political pressure on the central bank and said the rate cut was not the result of the president’s calls, who had requested a 50 basis point reduction a day before the Fed meeting.
However, it should be noted that not all FOMC officials agreed with the decision, Boston Fed President Eric Rosengren and Kansas Fed President Esther George voted to keep interest rates without changes
At the same time, the Washington Post said Wednesday that former Fed officials Alan Greenspan and Janet Yellen had publicly stated that they support only a rate reduction.
On the trade front, it should be noted that the United States and China ended a brief round of talks on Wednesday to end their one-year tariff war with little progress.
In Europe, the Bank of England will announce its decision on interest rates and monetary policy. The central bank is expected to keep rates unchanged at 0.75%.
In Asian markets, Japan’s Nikkei 225 closed practically flat with a slight advance of 0.09%, while the Shanghai composite index fell 0.81% to 2,908 points.
US stocks closed with widespread falls following the FOMC monetary policy meeting. The Dow Jones fell 1.23% to 26,864 points, the S&P 500 fell 1.09% to 2,980 integers and the Nasdaq ended up closing with a 1.19% drop in 8,175 units.
The US ADP private employment report showed that in July 156 thousand jobs were created, compared to 112 thousand in June and above the planned 150 thousand. Employment costs increased 2.7% in the last 12 months.
European indices are listed with mixed sign in the first trading bars, the DAX 30 in Frankfurt falls 0.08%, the FTSE 100 in London loses 0.19%, the CAC 40 in Paris rises 0.31% and the FTSE MIB in Milan wins 0.90%.
The Euro Stoxx 50 advances 0.17% to 3,472 integers, while the Ibex 35 scores a rise of 0.40% that has placed it slightly above 9,000 points.
In currencies, the dollar rose to a maximum of two years after the Federal Reserve of the United States cooled the market expectations of a long cycle of monetary relaxation. On the daily chart of the dollar index, you can see how it exceeded the barrier of 98 points with forcefulness and volume, establishing a new annual maximum.
The European indexes presented mixed signals in the first trading periods, the DAX 30 in Frankfurt falls 0.08%, the FTSE 100 in London loses 0.19%, the CAC 40 in Paris rises 0.31% and the FTSE MIB of Milan wins 0.90%.
The Euro Stoxx 50 advances 0.17% to 3,472 integers, while the Ibex 35 scores a rise of 0.40% that has placed it slightly above 9,000 points.
In currencies, the dollar rose to a maximum of two years after the Federal Reserve of the United States cooled the market expectations of a long cycle of monetary relaxation. On the daily chart of the dollar index, you can see how it exceeded the barrier of 98 points with forcefulness and volume, establishing a new annual maximum.
The Euro Stoxx 50 rose 0.17% to 3,472 integers, while the Ibex 35 recorded a rise of 0.40% that has placed it slightly above 9,000 points.
In the Forex markets, the dollar rose to a maximum of two years after the Federal Reserve of the United States cooled the market expectations of a long cycle of monetary relaxation. On the daily chart of the dollar index, you can see how it exceeded the barrier of 98 points with forcefulness and volume, establishing a new annual maximum.
The euro fell to a minimum of two years with a 0.76% decline to $1.1072, in the Asian session this Thursday it continued to fall and is currently trading at 1.1035. The pound sterling closed with a 0.04% decrease at $1,2153, which is its lowest level since March 2017.
In the commodities market, the price of light oil in Texas rose 0.9% on Wednesday to $58.58 per barrel, driven by the drop in weekly US crude oil reserves. The price of spot gold plummeted 1.30% to $1,412, pressed by the strong advance of the dollar.
On the economic side, it should be noted that China’s manufacturing PMI rose unexpectedly from 49.4 to 49.9 points. Later in the day the PMIs of manufactures of the main countries of the euro zone will be published.
In the United States, we will know the manufacturing PMI reading and weekly unemployment demands. The official employment report will be released tomorrow, the unemployment rate is expected to remain at 3.7%, salary income is expected to rise from 3.1% to 3.2% and the creation of non-farm payrolls are reviewed down from 224 thousand to 164 thousand.
Friday’s session will also publish the trade balance, factory orders and consumer sentiment, three other qualified economic indicators of high market impact.
