Fed holds off, weakens marts
Philippine shares were sold down last week as funds realigned with the latest Financial Times Stock Exchange rebalancing, which saw a spike in trading activity toward the close
Wall Street’s main indices pulled back on the final day of trading last week after an expected slew of data dampened hopes for earlier rate cuts from the US Federal Reserve, while European equities held near recent highs.
Oil and cryptocurrency bitcoin fell on profit-taking after making strong gains earlier in the week.
Paris and Frankfurt ended little changed and up sharply for the week, holding just below the record intraday highs they touched Thursday.
The shares gained on expectations that Europe’s stuttering growth might enable the European Central Bank to start cutting interest rates this summer, even if the US Fed does not.
“We’re seeing continued rotation out of US markets,” said Chris Beauchamp, an analyst at IG.com.
“Recent inflation prints and economic data have added to the cautious outlook,” he added.
But a potential ECB shift to earlier rate cuts seems to have lit a fresh fire under European stocks, Beauchamp said.
Philippine shares were sold down last week as funds realigned with the latest Financial Times Stock Exchange rebalancing, which saw a spike in trading activity towards the close.
In addition, equities also dipped as the February producer price index surpassed economists’ expectations, Regina Capital Development Corp. managing director Luis Limlingan said.
Investors are closely monitoring Friday morning for economic data covering consumer sentiment, import prices, and industrial production, he added.
Fed guidance not needed
Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, said the Norwegian and Swiss central banks could also cut rates in the coming weeks.
Even if neither country uses the euro, their moves would underscore that European monetary policy does not have to take its cue from the Fed.
In the United States, a sharper-thanexpected jump in wholesale price data had sent US shares lower Thursday, with those inflation concerns carrying over into Friday.
This week’s inflation data reinforced ideas that the Federal Reserve could take longer to cut rates, and also raised concerns about the impact of both inflation and extended high borrowing costs on the economy.
All three main Wall Street indices retreated Friday, with the tech-heavy Nasdaq down 1.0 percent.
“This week’s inflation data reinforced ideas that the Federal Reserve could take longer to cut rates, and also raised concerns about the impact of both inflation and extended high borrowing costs on the economy,” said Charles Schwab analyst Joe Mazzola.
Eyes next week turn to the Fed’s twoday policy meeting, which will culminate in their next rate decision.
Thursday’s surprisingly large bump in February’s US producer price index followed hotter-than-expected consumer inflation earlier in the week.
While Fed officials are not expected to move on rates next Wednesday, their post-meeting statement will be scrutinized for hints of their thinking, with many — including boss Jerome Powell — having warned they will only cut when they’re confident inflation is under control.