Stock markets diverge, gold hits high tracking global unrest ~ EconomyLens.com

London (AFP) – Global stock markets diverged on Wednesday while gold set a new record high as investors looked forward to a US Fed rate decision and geopolitical concerns returned to the fore. European and Asian stock markets traded mixed, while Wall Street rebounded following Tuesday’s tech-led losses. “There is a modicum of buy-the-dip interest in the mega-cap stocks, which led yesterday’s slide,” said Briefing.com analyst Patrick O’Hare.

The US Federal Reserve was widely expected to extend its rate cut pause later on Wednesday and investors were eagerly awaiting comments from Fed Chairman Jerome Powell about how the bank seeks to chart a path through the economic turbulence unleashed by US President Donald Trump’s ever-changing approach to tariffs. “One should expect the overarching message from Fed Chair Powell to be that the Fed is waiting to see what policies are enacted, and their effects on economic activity, before making any additional policy moves,” said O’Hare. That may make the Fed’s updated Summary of Economic Projections the main event for investors. The previously quarterly summary, issued in December, predicted two interest rate cuts in 2025.

But Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the prospect of more cuts may not cheer investors. “Even the prospect of lowering borrowing costs unlikely to provide much solace given that they would be seen as indicating increasing weakness in the US economy,” she said. Many economists have warned that the tariffs — which are being met with retaliation by some countries — will tip the US economy, and possibly others, into recession.

Meanwhile, the price of gold, seen as a safe-haven investment, struck a record high above $3,045 an ounce on fears of a fresh upsurge in hostilities in the Middle East after Israel launched its most intense strikes on Gaza since a ceasefire with Hamas took effect. Oil prices edged higher, even as Hamas said it remained open to negotiations while calling for pressure on Israel to implement a Gaza truce. Over in Moscow, Russia accused Ukraine of trying to “derail” agreements reached between Vladimir Putin and Trump to halt strikes on energy infrastructure.

In afternoon trading in Europe, London dipped and Frankfurt fell while Paris gained. Official data showed eurozone inflation eased more than previously estimated in February, driven by a slowdown in consumer price increases in Germany. Inflation in the single currency area slowed to 2.3 percent last month, a slight change from the 2.4 percent figure published on March 3.

Elsewhere, the Turkish lira plunged to an all-time low against the dollar on Wednesday, after police raided the home of Istanbul’s powerful opposition mayor, Ekrem Imamoglu. The currency was trading at 39 liras per dollar after the mayor, a key opponent of President Recep Tayyip Erdogan, was detained over a corruption probe, a move denounced by his opposition CHP party as a “coup.” The yen gave up initial gains against the dollar after the Bank of Japan kept interest rates on hold, warning about “high uncertainties” including over trade. Japan’s Nikkei 225 stock index also gave up gains to end lower.

Elsewhere in Asia, Jakarta’s stock market rebounded only slightly, having plummeted more than seven percent Tuesday in the biggest plunge since September 2011, over concerns about Indonesia’s economy amid weak consumer spending.