LONDON: World stock markets struggled Wednesday as investors were underwhelmed by a major speech from US President Donald Trump and awaited the Federal Reserve’s first interest rate decision of the year.
Trump delivered his maiden State of the Union address on Tuesday, declaring that taxes had been slashed, jobs created and “the stock market has smashed one record after another” under his presidency.
He also struck a conciliatory note, calling for Democrats’ support for a $1.5-trillion investment plan to renew the country’s creaking transport infrastructure.
But despite an initial positive ripple from the address, Asian bourses largely failed to shrug off a strongly negative Wall Street lead, where the Dow on Tuesday posted its largest decline since May.
Investors are now on tenterhooks for the Fed rate call on Wednesday because it is the last under the leadership of chair Janet Yellen — and could potentially signal an acceleration of rate hikes under incoming chief Jerome Powell.
– Yellen rides into sunset –
“Yellen will ride off into the sunset with the job done, leaving markets to focus on the prospect of a rise in rates at the March meeting,” Manulife Asset Management equities analyst Will Hamlyn told AFP.
Yellen departs with the US economic recovery in full swing amid low inflation, steady job growth and asset prices repeatedly smashing records.
Markets expect Fed policymakers to leave interest rates unchanged.
Prior to Trump’s speech, Wall Street had tumbled on Tuesday for a second straight session, battered by health sector worries and higher Treasury bond yields.
New York’s benchmark Dow Jones Industrial Average dived 1.4 percent — the biggest drop in percentage terms in more than eight months.
“Trump’s State of the Union address did not cause too much market movement, perhaps because it’s followed so swiftly by Wednesday’s first Fed meeting of 2018 and last of Janet Yellen’s tenure as chair,” said Spreadex analyst Connor Campbell.
He told AFP: “The rise in bond yields suggests investors are expecting something on the hawkish side of things this Wednesday, expectations that have helped dragged the Dow Jones from its all-time highs.”
– Buying opportunity? –
Shares flattened in Europe, as investors got their teeth into corporate activity and mulled the ongoing world economic recovery.
“European markets are mixed but largely flat … giving investors pause for thought as to whether the recent dips have provided a buying opportunity given the current synchronised global economic recovery,” noted Interactive Investor equities analyst Richard Hunter.
ArcelorMittal shares sank 1.4 percent to 29.17 euros in Paris, as the steel giant’s soaring annual net profits were eclipsed by disappointment over its shareholder dividend.
In Frankfurt, Siemens rose 1.1 percent to 122.5 euros after posting a 12-percent increase in first-quarter net profits.
And in London, energy major Royal Dutch Shell shares flatlined after selling its stake in a Thai gas field for $750 million (605 million euros) to state-owned peer PTTEP.
Source: Brecorder.com
