Markets rise even as global growth expectations fall on trade war fears

Markets rose on Tuesday.

The S&P 500 rose 0.4 percent, the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 rose 0.4 percent.

In testimony to the Senate Banking Committee on Tuesday, Federal Reserve Chairman Jerome Powell said: “With a strong job market, inflation close to our objective, and the risks to the outlook roughly balanced, the FOMC believes that – for now – the best way forward is to keep gradually raising the federal funds rate.”

However, fund managers have become less optimistic.

According to the July BofA Merrill Lynch survey of fund managers, the percentage of those who expect the global economy to be stronger a year from now is at its lowest since February 2016. It fell to a net of negative 11 percent, down from positive 40 percent at the start of 2018.

“Investor sentiment is bearish this month, with survey respondents eyeing the risks from a possible trade war,” said Michael Hartnett, BofA’s chief investment strategist.