LONDON: Major global stock markets retreated Thursday following a weaker-than-forecast US economic outlook and despite the Federal Reserve trying to calm fears over President Donald Trump’s tariffs.
After keeping rates on hold, Fed boss Jerome Powell on Wednesday suggested that any increase to consumer prices caused by tariffs would likely be short-lived, even as the central bank slashed its growth outlook and hiked inflation expectations.
Wall Street rallied on his message Wednesday, but turned lower in after-hours trading and fell at the start of trading on Thursday.The fall in Wall Street in pre-market trading dragged European indices even further lower, with Frankfurt’s DAX falling 2.0 per cent at one moment.
“The move shows that yesterday’s sharp rally across US markets in the wake of the FOMC’s Summary of Economic Projections and Fed Chair Jerome Powell’s press conference, was not a signal that all is well and that buyers can safely return to the markets,” said Trade Nation analyst David Morrison. The retreat by equity markets “appears to be an indication of the uncertainty overlaying the market as investors struggle with a variety of major geopolitical factors, along with the apparent random behaviour of the Trump administration,” he added.
Lingering tariff fears and geopolitical developments helped safe-haven gold to another record above $3,057.49 an ounce.European Central Bank chief Christine Lagarde warned Thursday a trade war between the United States and Europe could shave half a percentage point off eurozone growth and push up inflation.
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