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Global markets remain jittery amid conflicting signals from world economy
| 07/10/2019
- US stock markets rise slightly and USD surges while US Treasuries drop
- Investors becoming reluctant to partake in bull run before Powell testimony
- Stock markets move lower in Europe, China and Hong Kong
Stock markets in the United States closed somewhat higher on Tuesday after trading sideways for the biggest part of the day. Treasuries moved lower, but the USD reached its best level since the middle of last month.
Just before the close of trade, the S&P 500 suddenly started moving, with stronger tech stocks partly compensating for a drop in consumer staples and materials. The FAANG stocks, such as Facebook and Amazon, led gains in the equity benchmark.
Trading could remain volatile ahead of this week’s key testimony from Fed chairman Jerome Powell, with analysts assessing the likelihood of lower rates and other stimulus measures amid inconsistent signals from the world economy. Bond and stock investors are no longer so eager to take part in the bull run as a Fed rate cut has already been priced into current stock prices.
Fiera Capital Corp. portfolio manager and vice president Candice Bangsund said: “Powell is likely to walk a fine line between the hawks and doves in his testimony.”
In Europe, the STOXX 600 traded lower after BASF, the world’s biggest chemical firm, reduced its earnings forecast for this year because of international trade conflicts. In Japan, stock markets reversed earlier gains, while they were choppy in South Korea. China and Hong Kong reported small drops, while bonds strengthened in Italy. In Mexico, the peso lost value after the finance minister resigned.
In other economic news, bitcoin continued its bull run. The price of West Texas Intermediate crude oil increased, while the GBP lost value after a prediction by economists that the British economy would contract in Q2. The Hong Kong dollar, meanwhile, fell amid ongoing uncertainty over legislation that would enable extraditions to China.