London (AFP) – Wall Street stocks hit fresh record highs on Tuesday as the US Federal Reserve prepared to meet, while the dollar slid. The Fed’s two-day gathering is widely expected to conclude on Wednesday with the central bank agreeing to trim borrowing costs, with policymakers trying to shore up the world’s biggest economy.
The dollar dropped against main rivals on Tuesday as lower interest rates make the greenback less attractive to investors, while safe haven gold hit yet another record high. “The Fed’s focus appears to have shelved inflation concerns for now, instead concentrating on a stalling (US) jobs market, which should lead to a 0.25-percent cut,” noted Richard Hunter, head of markets at Interactive Investor.
Data released on Tuesday showed retail sales in the United States rose more than analysts expected in August, even as the effects of President Donald Trump’s tariffs ripple through the US economy. Overall sales jumped by 0.6 percent on a month-on-month basis in August, beating expectations of a 0.2-percent gain, showing US consumers are not holding back despite the softening jobs market. Separate data showed US non-fuel import prices rose by 0.4 percent in August, following no gain in July.
“Today’s data won’t change the market’s expectation that the Fed will vote tomorrow to cut the target range for the fed funds rate by 25 basis points to 4.00-4.25 percent, but it will presumably temper calls for a 50-basis-point cut,” said Briefing.com analyst Patrick O’Hare. Wall Street’s S&P 500 and Nasdaq indices pushed to fresh record highs as trading got underway on Tuesday.
Trump announced on Tuesday that the United States and China had reached a deal over TikTok, which Washington says must pass into US-controlled ownership. Trump said he would confirm the deal when he speaks with his Chinese counterpart Xi Jinping on Friday. The Fed meeting takes place with Trump appointee Stephen Miran as a new member of the bank’s rate-setting committee after the Senate narrowly voted to confirm his appointment late on Monday.
Meanwhile, a US federal appeals court ruled that Fed Governor Lisa Cook can remain in her position while challenging her ouster from the bank — after Trump sought to fire her. Miran’s appointment comes as the president demands that the Fed cuts borrowing costs and accuses the central bank’s chief, Jerome Powell, of being unfit for the job.
Expectations that US rates will be reduced over the next few months and possibly into 2026 continued to weigh on the dollar and pushed up gold to an all-time peak close to $3,700 an ounce. The British pound firmed versus the dollar. Analysts increasingly expect the Bank of England to maintain its key interest rate on Thursday and for the remainder of 2025. Official data on Tuesday showed UK unemployment remaining at a four-year high of 4.7 percent amid stubbornly high British inflation.
European stock markets fell on Tuesday following a steady showing by Asia’s main indices. Shares in Germany’s Thyssenkrupp rose around eight percent in Frankfurt after India’s Jindal Steel International made an offer for the company’s steel division.
– Key figures at around 1330 GMT –
New York – Dow: UP less than 0.1 percent at 45,898.56 points
New York – S&P 500: UP 0.1 percent at 6,624.42
New York – Nasdaq Composite: UP 0.2 percent at 22,397.50
London – FTSE 100: DOWN 0.6 percent at 9,220.07
Paris – CAC 40: DOWN 0.4 percent at 7,865.57
Frankfurt – DAX: DOWN 0.9 percent at 23,531.60
Tokyo – Nikkei 225: UP 0.3 percent at 44,902.27 (close)
Hong Kong – Hang Seng Index: FLAT at 26,438.51 (close)
Shanghai – Composite: FLAT at 3,861.87 (close)
Euro/dollar: UP at $1.1823 from $1.1768 on Monday
Pound/dollar: UP at $1.3657 from $1.3609
Dollar/yen: DOWN at 146.87 yen from 147.38 yen
Euro/pound: UP at 86.59 pence from 86.47 pence
Brent North Sea Crude: UP 1.0 percent at $68.10 per barrel
West Texas Intermediate: UP 1.3 percent at $64.10 per barrel
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© 2024 AFP
