The Courier & Advertiser (Fife Edition)

London drifts into red after Powell news

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London markets drifted into the red as traders turned their focus to Federal Reserve boss Jerome Powell as he gave Wall Street a shot in the arm with a soft approach to inflation.

European sentiment remained strained throughout the session after Mr Powell delivered his new approach to monetary policy, saying he will tolerate inflation rising above 2% for short periods of time.

The FTSE 100 closed 45.61 points lower at 5,999.99 at the end of trading yesterday.

David Madden, market analyst at CMC Markets, said: “Stocks are in the red after the much-awaited update from Jerome Powell. The Fed has been operating an extremely loose monetary policy since the pandemic set in, and inflation is on the rise so it seems the bank is keen to drive ahead with a loose policy without the constraint­s of changing their strategy on account of inflation.

“There hasn’t been a particular­ly positive reaction to Powell’s update in Europe, even though it seems as if the Fed has essentiall­y left the door open to an extremely aggressive policy.”

The Dow Jones did rise after the Fed chief’s approach paved the way for years of more progrowth policies.

In Europe, the major markets closed in the red after the US economy reported a 31.7% slump in the second quarter of 2020.The German Dax fell by 0.71%, while the French Cac moved 0.64% lower Sterling was flat after a fairly subdued day for economic updates .

The pound fell 0.03% versus the US dollar at 1.320 and was up 0.08% against the euro at 1.117.

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