Stock rally flags after strong U.S

Stock rally flags after strong U.S

Stock rally flags after strong U.S

The Australian dollar, often considered a barometer for global risk appetite, fell 0.4 per cent to US$0.7246. That has sent stock markets higher.

"Markets were braced for a more dovish tone at this week's FOMC meeting but the Fed still managed to surprise on the dovish side". "There is still a lot to worry about outside the USA with growth in Europe and China slowing".

The data suggests slower USA growth and adds to a growing list of economic readings indicating slowing global growth.

Global equity markets mostly rose Thursday, propelled by Facebook's stellar earnings and the Federal Reserve's pledge to be patient in raising borrowing costs further, while US bond yields fell on indications of weaker than expected inflation.

Just as the Fed's four rate increases past year were a product of better-than-expected growth nudged higher by some of Trump's policies - a sign of economic strength even if the president called it otherwise - the policy shift this week was a sign the best days of Trumponomics may be over.

Since the Fed began its policy normalization program in September 2017, it has dumped more than $388 billion of US treasuries and mortgage-backed securities.

Stocks had taken heart after US President Donald Trump said he would meet with Chinese President Xi Jinping soon to try to seal a comprehensive trade deal as the top US negotiator reported "substantial progress" in the talks.

The U.S. bond market never fully bought into the enthusiastic tenor to risk markets, including equities, year-to-date given signs of cracks in the consumer and peaking corporate profit growth.

The top US negotiator at the talks reported "substantial progress" in the talks. That is especially so with global companies facing the impact of Trump's trade war with China and the higher tariffs on imports of steel and aluminium (which is hurting the very manufacturers Trump reckoned to help, such as Harley Davidson, Ford, the farm sector etc) and being hit by higher costs.

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The previously upbeat mood was also chilled somewhat by White House insistence that March 1 was a hard deadline for a deal, failure of which would lead to an increase in US tariffs on Chinese goods.

"If there is something deeper going on", he said, "It is possible that economic performance continues to deteriorate".

United States futures gained. Nasdaq futures are up 0.4% after the underlying index on Wednesday closed 2.6% higher.

"We are less pessimistic since these negotiations are being conducted by senior politicians, not by trade bureaucrats", they said. Futures on the Dow and S&P 500 are posting slight gains, up about 0.1% each. The Nasdaq jumped 1.37 percent on the back of a near 11 percent rise in Facebook Inc. The Dow slipped 0.06 per cent. The estimated rate of expansion for the first quarter bounced to 2.39 percent from 2.17 percent last Friday.

Against a basket of currencies, the dollar was a fraction firmer at 95.622 thanks in part to a pullback in the euro to $1.1439.

Indeed, Jens Weidmann, the Bundesbank president and a member of the European Central Bank Governing Council, painted a bleak picture of the German economy yesterday, saying the slump in Europe's largest economy will last longer than initially thought.

Gold prices hovered just short of nine-month highs, supported by the fall in bond yields and expectations for a softer dollar.

JPMorgan Chase & Co. strategists still expect the central bank to resume tightening after mid-2019, but recommend that investors unwind their bets for the USA five- to 30-year yield curve to flatten. Our expectation is that the euro area slowdown will stabilise since domestic factors remain strong and external headwinds are likely to abate.

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