New York (AFP) – The dollar hit a three-year low on Thursday as President Donald Trump eyed candidates to succeed Federal Reserve boss Jerome Powell, fueling bets of cuts to US interest rates. But Wall Street rose handsomely, lifting the S&P 500 to near a closing record, following solid earnings from chip company Micron and a signal that the White House could extend an upcoming tariff deadline on trading partners.
Trump had suggested Wednesday that he was lining up Powell’s replacement ahead of an expected departure next year. “No decisions are imminent, although the president has the right to change his mind,” a White House official told AFP. The Dollar Index, which compares the greenback to a basket of major currencies, hit its lowest level since March 2022 at 96,997 points. The pound meanwhile reached its highest level against the dollar since October 2021.
“Concerns over the Federal Reserve’s independence and growing expectations for monetary easing weighed on the currency,” said George Pavel, general manager at Naga.com Middle East, a trading platform. “The move, if confirmed, would raise serious questions about the central bank’s autonomy at a time of heightened policy uncertainty, painting a bearish scenario for the greenback,” Pavel said. Since returning to the White House, Trump has constantly hit out at Powell for not cutting US interest rates and questioned his intelligence, stoking worries about the bank’s independence.
“I know within three or four people who I’m going to pick,” Trump told reporters after a NATO summit. The Wall Street Journal reported that Trump could announce a replacement as early as September, with Treasury Secretary Scott Bessent, economic adviser Kevin Hassett, and former Fed governor Kevin Warsh among the contenders. Earlier this week, Powell told lawmakers the bank would assess the impact of Trump’s tariffs on the economy before making any rate move.
Data meanwhile showed that the US economy decreased at an annual rate of 0.5 percent in the first quarter, lower than previously estimated. However, markets tend to take such data in stride because it is backward looking and the calendar is now approaching the end of the second quarter. On the positive side, US durable goods orders for May topped estimates while labor market data was mixed.
European and Asian stock markets diverged and oil prices were steadier as Middle East tensions eased and focus turned back to US trade negotiations. Shares in European defense companies rose after NATO countries on Wednesday agreed to ramp up military spending. Rheinmetall finished more than seven percent higher in Frankfurt while France’s Thales gained about three percent and Britain’s BAE systems added 3.8 percent.
Asia’s main stock market closed mixed.
– Key figures at around 2030 GMT –
New York – Dow: UP 0.9 percent at 43,386.84 (close)
New York – S&P 500: UP 0.8 percent at 6,141.02 (close)
New York – Nasdaq Composite: UP 1.0 percent at 20,167.91 (close)
London – FTSE 100: UP 0.2 percent at 8,735.60 (close)
Paris – CAC 40: FLAT at 7,557.31 (close)
Frankfurt – DAX: UP 0.6 percent at 23,649.30 (close)
Tokyo – Nikkei 225: UP 1.7 percent at 39,584.58 (close)
Hong Kong – Hang Seng Index: DOWN 0.6 percent at 24,325.40 (close)
Shanghai – Composite: DOWN 0.2 percent at 3,448.45 (close)
New York – Dow: DOWN 0.3 percent at 42,982.43 (close)
Euro/dollar: UP at $1.1701 from $1.1659 on Wednesday
Pound/dollar: UP at $1.3725 from $1.3664
Dollar/yen: DOWN at 144.44 yen from 145.24 yen
Euro/pound: DOWN at 85.22 pence from 85.31 pence
West Texas Intermediate: UP 0.5 percent at $65.24 per barrel
Brent North Sea Crude: UP 0.1 percent at $67.73 per barrel
© 2024 AFP
