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Free Malaysia Today
6 days ago
- Business
- Free Malaysia Today
Asian stocks climb as Fed cut bets gain momentum
Equities in Japan, South Korea and Australia all rose today after the S&P 500 advanced 0.8% to within striking distance of a new high. (Bloomberg pic) TOKYO : Asian stocks advanced and a gauge of global equities was on track for another record high on calming geopolitical concerns and increased expectations for Federal Reserve (Fed) interest-rate cuts this year. Equities in Japan, South Korea and Australia all rose today after the S&P 500 advanced 0.8% to within striking distance of a new high. The Nasdaq 100 achieved the feat after rising 0.9% yesterday, helping MSCI's global shares index to a record high. US stock futures edged higher today. Treasuries slipped after rallying the previous day on increased expectations for Fed rate cuts. The swaps market has fully priced two further rate reductions this year and yesterday increased bets on a third. 'The stock market is back at record highs as various uncertainties start to fade,' said Paul Stanley at Granite Bay Wealth Management. 'The market is betting on continued progress on trade, and a de-escalation of tensions in the Middle East is giving investors confidence,' Stanley said. The moves were driven by US economic data that supported the case for policy easing. Consumer spending grew in the first quarter at the weakest pace since the onset of the pandemic. As a result, gross domestic product slid at a downwardly revised 0.5% annualised rate. Recurring applications for unemployment benefits rose to the highest since 2021 – but initial claims fell. An index of the dollar edged higher after dropping for four straight sessions. West Texas Intermediate oil's modest rise for a third day showed signs of relative calm in the Middle East. The cross-asset moves show that investors are looking beyond the near-term volatility spurred by tariffs and war to instead focus on central bank policy and the health of the US economy. After markets closed in New York yesterday, US commerce secretary Howard Lutnick said the US and China had finalised an understanding on trade following talks last month. Stock-market volatility is likely to remain higher in the second half of the year (H2 2025) given lingering macro and policy uncertainty, according to Goldman Sachs Group Inc strategists. The team led by Andrea Ferrario says stagflationary shocks remain a key risk for balanced portfolios amid tariff-induced inflation risks. Meanwhile, the treasury department announced a deal with G7 allies that will exclude US companies from some taxes imposed by other countries in exchange for removing the 'revenge tax' proposal from President Donald Trump's tax bill. In Asia, the yen weakened slightly after inflation in Tokyo slowed for the first time in four months. Other economic data set for release includes trade for the Philippines and industrial profits in China. Markets are closed in Indonesia and Malaysia. US interest rates A flurry of Fed officials this week made clear they'll need a few more months to gain confidence that tariff-driven price hikes won't raise inflation in a persistent way. In an interview on Bloomberg Surveillance, San Francisco Fed chief Mary Daly acknowledged she's seeing increasing evidence that tariffs may not lead to a large or sustained inflation surge. However, that merely made her open to a rate cut 'in the fall'. Richmond Fed president Tom Barkin said he expects tariffs will put upward pressure on prices, and the central bank should wait for more clarity before adjusting rates. Fed Bank of Boston president Susan Collins said she sees at least one cut this year, but indicated July would be too early for such a move. Economists see the personal consumption expenditures price index excluding food and energy – the Fed's preferred gauge of underlying inflation – rising 0.1% in May. That would mark the tamest three-month stretch since the pandemic five years ago. 'The market seems to be riding high on hopes inflation is cooling and the Fed can start cutting soon, and a soft PCE print could seal that story,' said Haris Khurshid, CIO at Karobaar Capital. 'But if growth doesn't pick up or earnings disappoint, this rally could run out of steam fast,' Khurshid said.
CNN
6 days ago
- Business
- CNN
Stocks rise and S&P 500 nears record high
US stocks opened higher on Thursday and the benchmark S&P 500 was just a whisker away from hitting an all-time high. The Dow was higher by 200 points, or 0.48%. The broader S&P 500 gained 0.37% and the tech-heavy Nasdaq Composite rose 0.4%. Stocks pushed higher amid a flurry of economic data on Thursday morning, including data that showed a downward revision to how much the economy contracted in the first quarter. That revised data is 'backward looking,' and markets were higher on Thursday because they have already priced in the turmoil from earlier this year, Paul Stanley, chief investment officer at Granite Bay Wealth Management, said in an email. 'The market is betting on continued progress on trade and a de-escalation of tensions in the Middle East is giving investors confidence,' Stanley said. The S&P 500 has been on a round trip this year as President Donald Trump's trade policy has jolted markets. The benchmark index hit a record high on February 19 before dropping as low as 18.9% by early April as tariff confusion rocked markets. The index has since nearly recouped all of those losses. At its low on April 8, the S&P 500 had shed $9.8 trillion in market value since its record high on February 19, according to FactSet data. The index is set to recover all of that market value as it tests a new record high. The index has soared 22% since hitting its low point on April 8 in what has been a remarkable come back from the precipice of a bear market. Wall Street analysts are mixed on whether the index can grind higher, or whether its high valuation means there's more downside to come. As tensions in the Middle East have settled, the focus returns to Trump's agenda. Lawmakers hope to deliver the president's budget bill to his desk by July 4, and his administration's deadline for trade deals is July 9. 'Meaningful progress on any of the two matters can bolster equities to fresh records,' José Torres, senior economist at Interactive Brokers, said in a note. Investors in coming weeks will be focused on how tariff rates ultimately settle and whether Trump's trade policy might reignite inflation. 'It would help stocks if we were to see a narrative shift from a focus on tariff, trade policy and geopolitics to company fundamentals,' said Carol Schleif, chief market strategist, BMO Private Wealth, in a note. Despite the rally, the ratio of bullish versus bearish outlooks for the market remains below the historical average, Ed Yardeni, president of Yardeni Research, said in a Wednesday note. 'That suggests more upside for the stock market since many investors remain wary and are not overly bullish,' Yardeni said. The US dollar on Thursday dropped to its lowest level since February 2022 after a report by the Wall Street Journal that Trump plans to announce his pick for Federal Reserve Chair Jerome Powell's successor as early as this fall. Powell's term ends in May 2026, meaning there would effectively be a 'shadow' Fed chair in the months before his term expires. The US dollar index, which measures the dollar's strength against six major foreign currencies, dropped as much as 0.7% overnight before parsing some losses and trading down 0.4% in the morning. 'A candidate who is perceived as being more open to lowering rates in line with President Trump's demands would reinforce the US dollar's current weakening trend,' said Lee Hardman, senior currency analyst at MUFG, in a Wednesday note. The dollar index has tumbled nearly 10% this year. The euro and British pound this year have both hit their highest levels against the dollar in four years. Francesco Pesole, an FX strategist at ING, told CNN that concerns about the Fed's independence have been one of the contributing factors to the dollar's broad decline this year. 'One of the key foundations of the strong dollar, of the dollar as a dominant currency globally, is to have an independent central bank,' Pesole said. 'So, if [global investors] feel there is greater influence of politics into the Fed's decisions, then they are pricing in a greater risk for the dollar.' Greg Valliere, chief US policy strategist at AGF Investments, said in a Wednesday note that Trump announcing Powell's successor is a 'terrible idea,' as it would be 'sure to annoy and confuse the financial markets if there are two Fed chairs.' 'The damage to the Fed's independence would be considerable if Trump becomes a monetary back-seat driver, second-guessing Fed policies this fall,' Valliere said.
CNN
6 days ago
- Business
- CNN
Stocks rise and S&P 500 nears record high
US stocks opened higher on Thursday and the benchmark S&P 500 was just a whisker away from hitting an all-time high. The Dow was higher by 200 points, or 0.48%. The broader S&P 500 gained 0.37% and the tech-heavy Nasdaq Composite rose 0.4%. Stocks pushed higher amid a flurry of economic data on Thursday morning, including data that showed a downward revision to how much the economy contracted in the first quarter. That revised data is 'backward looking,' and markets were higher on Thursday because they have already priced in the turmoil from earlier this year, Paul Stanley, chief investment officer at Granite Bay Wealth Management, said in an email. 'The market is betting on continued progress on trade and a de-escalation of tensions in the Middle East is giving investors confidence,' Stanley said. The S&P 500 has been on a round trip this year as President Donald Trump's trade policy has jolted markets. The benchmark index hit a record high on February 19 before dropping as low as 18.9% by early April as tariff confusion rocked markets. The index has since nearly recouped all of those losses. At its low on April 8, the S&P 500 had shed $9.8 trillion in market value since its record high on February 19, according to FactSet data. The index is set to recover all of that market value as it tests a new record high. The index has soared 22% since hitting its low point on April 8 in what has been a remarkable come back from the precipice of a bear market. Wall Street analysts are mixed on whether the index can grind higher, or whether its high valuation means there's more downside to come. As tensions in the Middle East have settled, the focus returns to Trump's agenda. Lawmakers hope to deliver the president's budget bill to his desk by July 4, and his administration's deadline for trade deals is July 9. 'Meaningful progress on any of the two matters can bolster equities to fresh records,' José Torres, senior economist at Interactive Brokers, said in a note. Investors in coming weeks will be focused on how tariff rates ultimately settle and whether Trump's trade policy might reignite inflation. 'It would help stocks if we were to see a narrative shift from a focus on tariff, trade policy and geopolitics to company fundamentals,' said Carol Schleif, chief market strategist, BMO Private Wealth, in a note. Despite the rally, the ratio of bullish versus bearish outlooks for the market remains below the historical average, Ed Yardeni, president of Yardeni Research, said in a Wednesday note. 'That suggests more upside for the stock market since many investors remain wary and are not overly bullish,' Yardeni said. The US dollar on Thursday dropped to its lowest level since February 2022 after a report by the Wall Street Journal that Trump plans to announce his pick for Federal Reserve Chair Jerome Powell's successor as early as this fall. Powell's term ends in May 2026, meaning there would effectively be a 'shadow' Fed chair in the months before his term expires. The US dollar index, which measures the dollar's strength against six major foreign currencies, dropped as much as 0.7% overnight before parsing some losses and trading down 0.4% in the morning. 'A candidate who is perceived as being more open to lowering rates in line with President Trump's demands would reinforce the US dollar's current weakening trend,' said Lee Hardman, senior currency analyst at MUFG, in a Wednesday note. The dollar index has tumbled nearly 10% this year. The euro and British pound this year have both hit their highest levels against the dollar in four years. Francesco Pesole, an FX strategist at ING, told CNN that concerns about the Fed's independence have been one of the contributing factors to the dollar's broad decline this year. 'One of the key foundations of the strong dollar, of the dollar as a dominant currency globally, is to have an independent central bank,' Pesole said. 'So, if [global investors] feel there is greater influence of politics into the Fed's decisions, then they are pricing in a greater risk for the dollar.' Greg Valliere, chief US policy strategist at AGF Investments, said in a Wednesday note that Trump announcing Powell's successor is a 'terrible idea,' as it would be 'sure to annoy and confuse the financial markets if there are two Fed chairs.' 'The damage to the Fed's independence would be considerable if Trump becomes a monetary back-seat driver, second-guessing Fed policies this fall,' Valliere said.
Yahoo
30-04-2025
- Business
- Yahoo
S&P 500 Plunges, Nasdaq Falls Nearly 3% After Surprise GDP Contraction
U.S. equities lost ground Wednesday after data pointed to a slowdown in economic growth, fueling concerns about trade policy and softening demand. The S&P 500 dropped as much as 2.3% after the open, while the Nasdaq Composite fell nearly 2.9%, led by weakness in tech shares. Both pared losses by midday, with the S&P down about 1% and the Nasdaq 1.3% lower. The Dow Jones Industrial Average slipped 0.6% to 40,291.44. Fresh figures from the U.S. Bureau of Economic Analysis showed first-quarter real gross domestic product shrank by 0.3%, the first contraction since early 2022. The pullback was largely attributed to a spike in imports, which are subtracted in GDP calculations, along with reduced government spending. The negative print came from a mix of higher tariffs and government belt-tightening, said Paul Stanley, chief investment officer at Granite Bay Wealth Management. Morgan Stanley (MS) cautioned that while the initial reading was negative, two more revisions are due and could shift the outlook. It's too soon to call a recession, he added. More data will tell the full story. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
14-03-2025
- Business
- Yahoo
Trump and Powell are playing from the same strategy book: Morning Brief
The stock market is used to the wait-and-see approach from the Fed. But now the president is riffing on that game plan too. Their deliveries contrast sharply. Federal Reserve Chair Jerome Powell is explicit. We can wait and are in a position to do so. And as the outlook evolves and the tariff landscape takes shape, the central bank can take action with its powder dry. Trump is opaque. When a sympathetic business journalist recently asked him to offer clarity to the market, he scoffed. The stock market's tanking? So what. Another day, another tariff. But the similarities between the two leaders come in the form of detachment from Wall Street panic and a longer-term view. Trump isn't exactly known for his patience. But on the issue of levies, he's been both unyielding in thought and transactional in practice. Mexico and Canada received some reprieve, but Europe is under new threats. And the dizzying back-and-forth has created a conceptual traffic jam of economic paralysis that has reverberated through consumer sentiment. Trump is daring heads of state to respond, Powell is waiting for Trump to make up his mind and data to change, and Wall Street is looking for the White House and the Fed to get off the fence. If Trump's distinctive tariff policy is a time bomb, the explosion of them taking effect isn't the only dangerous part. It's the ticking, the randomness of the timer, the affliction caused by the endless anticipation. Businesses may dislike tariffs. But what they really hate is uncertainty. Meanwhile, the Fed has to make sense of fluctuating pricing pressures. On Thursday, new inflation data showed price increases slowed in February — but economists saw warning signs that the central bank may interpret as reasons to continue waiting. Read more: From $5 eggs to insurance premiums, here's where prices are rising "Thursday's inflation data is backward looking, and the real worry is the inflationary effects that may come from tariffs, which is a wildcard for markets and the Federal Reserve," said Paul Stanley, chief investment officer at Granite Bay Wealth Management. "It's too early to tell what tariffs mean for inflation because we don't know yet the extent of the tariffs or if the administration will end up reversing course and adopting a more dovish tariff policy." But if tariff clarity is delayed indefinitely, it's hard to imagine rate cuts not sharing that itinerary. The waiting game has other ripple effects. As this newsletter has discussed this week, Wall Street is struggling to calibrate the timing of Trump's pronouncements with their potential longer-term consequences. What triggers a stock market sell-off today might actually boost corporate profits later this year. That's a favorable way of viewing Trump's America First strategy. 'If the Fed makes monetary policy decisions based on policies enacted today, they could make substantial cuts to interest rates in 2025," said Bill Adams, chief economist for Comerica Bank. "On the other hand, if they assume that the overall fiscal stance will be more supportive of growth after factoring in decisions likely to be made later in the year, they may reduce rates only a little, if at all, in 2025." Investors are used to the Fed's approach — and its straightforward dual mandate of stable prices and maximum employment. But they are still coming to grips with Trump's agenda. And as hard as it is to accept the sequencing of pain first and pleasure later, it's still not a guarantee. So far, the only sure thing is discomfort for today and uncertainty for tomorrow. Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban. Sign in to access your portfolio
