Jerome Powell eased investors’ fears that the Fed won’t end up going ahead with an interest rate cut this month, allowing the Dow Jones to leap back towards record-high territory.
Telling Congress that ‘uncertainties about the outlook have increased in recent months’, the central bank chief struck a particularly dovish tone in his pre-prepared remarks, going on to highlight slowing economic momentum, unresolved government policy issues, and weak inflation as potential problems for the US.
The Dow Jones gobbled all this up, lips smacking as it bounded 160 points higher. That puts the index back at 26950, only 50 or so points off of last Wednesday’s 27000-crossing all-time peak.
Its European peers were reluctant to share in this enthusiasm. Though the CAC rose 0.3%, the DAX remained in the red, nursing its wounds following the first half of the week’s Deutsche Bank (DE:DBKGn) and BASF-inflicted losses.
The FTSE’s gains were capped at 0.2%, held back by cable’s rebound. Not only did the pound benefit from the dollar’s post-Fed softening, it also had confirmation that the monthly GDP reading was at 0.3% in May against the alarming -0.4% seen in April. The pound couldn’t get too ahead of itself, however, given last week’s PMIs suggest growth could sink once again in June.
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