Stocks on Wall Street were muted and the US dollar was a little softer as US Federal Reserve chair Jerome Powell reiterated that the central bank isn’t under pressure to cut interest rates quickly.
The S&P 500 index dipped 0.2% at 7am in Auckland and the Dow Jones Industrial Average was broadly unchanged as investors tuned into to Powell’s testimony to the Senate Banking Committee.
Powell said the US economy is robust and that the central bank wants to make more inroads into the pace of inflation, but that he doesn’t see a reason to hurry further interest rate cuts.
The top US central banker also told policymakers that while the arguments for free trade make sense, it’s not for the Fed to comment on trade or tariff policy, simply to respond to it.
“Powell’s testimony had limited impact on market pricing for Fed policy,” Bank of New Zealand interest rate strategist Stuart Ritson said in a note. “A 25-basis-point rate cut is not fully priced until September and there is around 35 basis points of easing implied by the December Federal Open Market Committee.”
The kiwi dollar traded at 56.52 US cents at 7am in Auckland from 56.42 cents yesterday.
US President Donald Trump’s latest foray into trade policy continued to ripple through markets, with European steelmakers under pressure on the prospect of a 25% tariff on steel and aluminium exports to the US, and European Commission president Ursula von der Leyen said the bloc plans to retaliate.
The old world
The UK’s FTSE 100 index edged up 0.1% to a record with Shell pacing gains as the oil giant seeking up to 25% of service contracts for Nigeria’s Bonga North deepwater project.
Meanwhile, luxury stocks in Europe were buoyed by Kering’s December report, as the owner of Gucci’s sales fell less than expected.
European travel stocks were broadly weaker after the continent’s biggest travel operator TUI said bookings growth had slowed.
And the Marriott International’s forecast for 2025 came in below expectations, with a weak performance from its hotels in the greater China region coming as demand for internal Chinese travel remains tepid.
The tech-heavy Nasdaq was down 0.6% with plenty going on in the artificial intelligence space. Elon Musk, backed by a consortium of investors, unveiled a US$97.4 billion offer for OpenAI which was quickly rebuffed Sam Altman, while US vice president JD Vance urged world leaders to reject excessive regulation of AI, with the world’s biggest economy declining to endorse a joint declaration to agree a common set of principles to deliver safe AI systems.
And digital media company BuzzFeed said it plans to build an AI-driven social platform focused on interactive storytelling.
Closer to home, Australian futures indicate the S&P/ASX 200 index will slip 0.2% today, with Commonwealth Bank of Australia and AGL Energy the main companies reporting across the Tasman.
There’s no major local data or company results scheduled for today. The NZ Local Government Funding Agency is holding its monthly tender today, while NZ Debt Management issued an extra $5.5 billion in the 20235 syndicated tap yesterday.