ASX set to rise, Wall Street rallies; Oil prices lower
Falling oil prices should take some pressure off inflation, and that in turn could give the Federal Reserve more leeway to cut interest rates.
Wall Street loves lower rates because they can give the economy a boost by making it cheaper for US households and businesses to borrow money to buy a car or build a factory. But they could also give inflation more fuel. That latter threat is why the Fed has been hesitant to cut rates this year after lowering them through the end of last year.
The Fed has said repeatedly that it wants to wait and see how much Trump's tariffs will hurt the economy and raise inflation before committing to its next move. So far, the economy seems to be holding up OK, though a report on confidence among US consumers came in weaker on Tuesday than economists expected, while inflation has remained only a bit above the Fed's 2 per cent target.
Trump, though, has been pushing for more cuts to rates. And two of his appointees to the Fed have said in the last week that they may consider cutting rates as soon as the Fed's next meeting next month.
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Fed Chair Jerome Powell remains more cautious. He said again in testimony delivered to Congress Tuesday that the Fed is 'well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.'
Asked whether a cut could arrive as soon as July, Powell said, 'We will get to a place where we cut rates, sooner rather than later – but I wouldn't want to point to a particular meeting. I don't think we need to be in any rush because the economy is still strong.'
Such mixed messages had Treasury yields swivelling up and down in the bond market. The yield on the 10-year Treasury eased to 4.30 per cent from 4.34 per cent late on Monday.
The two-year Treasury yield, which more closely tracks expectations for Fed action, fell to 3.82 per cent from 3.84 per cent.
On Wall Street, cruise operator Carnival steamed 6.7 per cent higher after delivering a much stronger profit for the latest quarter than analysts expected. CEO Josh Weinstein said it's seeing strong demand from people booking cruises close to the departure date, and customers are spending strongly once on board. Carnival also raised its forecast for an underlying measure of profit for the full year.
Uber Technologies rose 7.8 per cent after it said customers in Atlanta can use its app to ride in Waymo autonomous vehicles.
Coinbase Global rallied 11.4 per cent as the cryptocurrency exchange rose with the price of bitcoin, which jumped back above $US105,000.
In stock markets abroad, indexes rallied more than 1 per cent everywhere from France to Germany to Japan following the announcement of the Israel-Iran ceasefire. Hong Kong's jump of 2.1 per cent and South Korea's leap of 3 per cent were two of the strongest moves.
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