Friday, 12 July 2019

S&P 500 hits new high as Powell gives strong hint of rate cut

Markets were mixed on Thursday.

The S&P 500 rose 0.2 percent to an all-time high while the Nikkei 225 rose 0.5 percent. However, the STOXX Europe 600 fell 0.1 percent.

Hopes for a rate cut by the Federal Reserve continued to drive market gains after Fed Chairman Jerome Powell told the Senate Banking Committee on Thursday that a preemptive rate cut could be necessary even if economic and job growth remain strong.

“Markets were in buoyant mood on Thursday as Fed Chairman Jerome Powell gave his strongest indication yet that the Federal Reserve will slash interest rates at the July 30-31 meeting,” said Raffi Boyadjian, senior investment analyst at XM.

Rajeev De Mello, chief investment officer at Bank of Singapore, said that “it’s much clearer that we have a rate cut” at the end of this month, “probably followed by one or more rate cuts” in the next few months.

However, the US 10-year Treasury yield rose 5.8 basis points after an afternoon Treasury bond sale saw weaker-than-expected demand.

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