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Sunday November 17th, 2019 4:12PM

World shares mostly rise after Fed signals US rate cut

By The Associated Press
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BANGKOK (AP) — Global shares mostly rose Thursday after Federal Reserve Chairman Jerome Powell suggested the U.S. central bank is ready to cut interest rates for the first time in a decade.

The Fed chairman told Congress in his semi-annual report that many in the U.S. central bank believe a weakening global economy and rising trade tensions have strengthened the case for a rate cut. That allayed investors' concerns that unexpectedly strong U.S. jobs data reported Friday might give the Fed reason to hold interest rates.

"Local equity markets are reveling in the best of both worlds this morning as local investors love nothing more than lower U.S. interest rates and a weaker U.S. dollar," Stephen Innes of Vanguard Markets said in a commentary.

Powell is due to appear before the Senate Banking Committee on Thursday but his testimony is not expected to have the same sort of impact.

Shares in Europe were uneven with Germany's DAX losing 0.1% to 12,360 and Britain's FTSE 100 flat at 7,529. The CAC 40 in France added 0.1% to 5,575.

Wall Street looked set to extend its winning streak, with Dow futures up 0.3% to 26,951 and the broader S&P 500 futures 0.2% higher at 3,005.

The U.S. stock market rallied through much of June after the Fed first signaled that it might cut rates if necessary to shore up the U.S. economy.

In his prepared statement on Wednesday, Powell said that since Fed officials met last month, "uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook." Meanwhile, inflation has fallen farther from the Fed's target.

The Fed's benchmark rate currently stands in a range of 2.25% to 2.5% after the central bank raised rates four times last year. Many investors have put the odds of a rate cut this month at 100%.

A quarter-point cut in interest rates, which many investors expect, isn't likely to have a big impact on consumers' credit cards or mortgage rates. But it would reassure markets that the Fed would be open to further rate cuts if more signs of weakness in the global economy emerge.

Investors will have to wait until the end of the month to see what action the Fed takes on interest rates at its next meeting of policymakers. Before then, however, the market will turn its attention to U.S. consumer inflation data on Thursday and the quarterly corporate earnings season which begins next week.

Retaliatory tariffs remain another worry for markets.

While China-U.S. trade tensions have calmed with a resumption of talks by phone between top envoys, friction with France looms after President Donald Trump's administration launched an investigation into French plans for a special tax targeting big tech companies.

In Asia, Hong Kong's Hang Seng jumped 0.8% to 28,431.80, while the Shanghai Composite index edged 0.1% higher to 2,917.76. In Japan, the Nikkei 225 index climbed 0.5% to 21,643.53 and South Korea's Kospi advanced 1.1% to 2,080.58. Australia's S&P ASX 200 gained 0.4% to 6,716.10. Shares also rose in Taiwan and Southeast Asia.

ENERGY: Benchmark U.S. crude oil picked up 21 cents to $60.64 per barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, it jumped $2.60 to settle at $60.43 a barrel, the highest level since late May. Brent crude oil, the international standard, added 24 cents to $67.25 per barrel. Overnight, it gained $2.85 to close at $67.01 a barrel.

CURRENCIES: The dollar fell to 108.14 Japanese yen from 108.45 yen on Wednesday. The euro strengthened to $1.1271 from $1.1250.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Financial Services
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