Stocks sink after Fed officials dampen rate cut hopes

30 Juin, 2019, 09:40 | Auteur: Auguste Feret
  • Jerome Powell holds a news conference following a two-day Federal Open Market Committee meeting in Washington U.S

Powell said that the Fed's independence from direct political control had served the country well and when central banks do not have that protection "you see bad things happening".

Although the Federal Reserve has been under political pressure to cut rates, Powell reiterated that the Federal Reserve is an independent body, and doesn't want to respond to any political influence or short-term data when making a decision.

The president has threatened to essentially hit all Chinse imports with tariffs if China does not meet the administration's demands for greater protections for USA technology.

Investors found no relief in a White House official's remarks - which downplayed expectations of US President Donald Trump's upcoming trade talks with his Chinese counterpart, Xi Jinping, at the G20 summit in Japan this weekend. Bidding for both safe-haven currencies persisted amid tensions between Iran and the United States.

"But neither side is ready to end the war", Kelly said, adding trade differences between the two countries likely will continue through to the USA presidential elections in November 2020.

"And they have Draghi who is - we should have Draghi instead of our Fed person", Trump said in response to whether he is working on a deal with Europe, during an exclusive interview with FOX Business' Maria Bartiromo.

The Dow Jones Industrial Average declined by more than 150 points during Tuesday trading, a slide that began Tuesday morning and ended with a 178-point loss at the close. The S&P 500 lost 3.99 points, or 0.14%, to 2,913.39 and the Nasdaq Composite added 20.15 points, or 0.26%, to 7,904.87.

Spot gold shed 0.8% to $1,411.21 per ounce as of 1:56 p.m. EDT (1756 GMT), having fallen more than 1% earlier in the session.

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Last week, the Federal Reserve chose to leave interest rates unchanged, and even suggested in its official statement that a cut may be in the foreseeable future.

USA gold futures settled 0.2% lower to $1,415.40, but remained above $1,400. Powell, however, said Fed policymakers are wrestling with whether uncertainties around US tariffs, Washington's conflict with trading partners and tame inflation require a rate cut. The dollar edged higher against a basket of currencies.

"If they start to cut rates it will not boost economic growth and very likely it's the start of serious cuts, not just one", he said.

The Japanese yen weakened 0.58% versus the greenback at 107.79 per dollar.

FILE PHOTO: Federal Reserve Chairman Jerome Powell speaks speaks at "C. Peter McColough Series on International Economics: A Conversation with Jerome H. Powell" at the Council on Foreign Relations in NY, U.S., June 25, 2019.

Trump said that in contrast, Powell was "sucking (money) like from a vacuum cleaner, " a reference to the Fed's efforts to lower its holdings of Treasury bonds.

Benchmark 10-year notes were last down 6/32 in price to yield 2.102%, up from 1.992% on Tuesday. Still, it is a major exporter of commodities, including oil, so its economy could benefit from reduced uncertainty for global trade.The price of oil was buoyed by an outage at a major refinery on the U.S. East Coast and industry data that showed U.S. crude stockpiles fell more than expected. U.S. West Texas Intermediate (WTI) crude futures rose $1.55, or 2.7%, to settle at $59.38 a barrel.

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