FTSE and other European markets enjoyed a bump this morning as expectations of an interest rate cut in the US mounted.
Caution expressed yesterday by the chairman of the US Federal Reserve, Jay Powell, has been interpreted as a likely nod that rate cuts would happen at the end of this month.
In late-morning trading, the FTSE 100 was trading up 0.03 per cent at a price of roughly 7,532, while the Cac rose 0.15 per cent to 5,575 and the Dax was flat at 12,371.
In the US, the S&P 500 climbed 0.45 per cent to 2,993, the Dow rose 0.29 per cent to 26,860 and the NASDAQ Composite was 0.75 per cent higher at 8,202.
Powell yesterday boosted the market’s expectations that the first interest rate cut in ten years will come this month with a gloomy testimony to a congressional committee.
In a prepared statement Powell said “trade tensions and concerns about global growth have been weighing on economic activity and the outlook” in the US.
Domestically, business investment has slowed notably while manufacturing output continued to decline, Powell said.
He added that there was “a risk that weak inflation will be even more persistent” than previously thought.
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David Madden, market analyst at CMC Markets UK, said: “Stock markets in Europe are higher this morning as traders feel the Federal Reserve will lower rates in the wake of the update from Fed chief, Jerome Powell yesterday.
“The central banker said the Fed would ‘act as appropriate’ to help the US economy, and he cautioned that ‘crosscurrent’ have weighed in the country’s outlook.
“Powell highlighted that the unemployment rate is near a 50 year low, but he did leave the door open to cutting rates,