With the Fed’s March meeting, decision and new economic forecasts this week, all attention will be on Washington and what the central bank hints at about the direction of interest rates.
With more evidence that US economic activity is slowing (but not dead), there’s a growing belief that the Fed will remain on hold into 2020 and investors see that message emerging from this week’s meeting of the US central bank.
Last week saw a surprisingly upbeat performance by major markets (though not Australia which fell 0.5%).
Wall Street ended at three-month highs and Europe shares closed the week with a 2.9% gain – despite fears over Brexit and slowing activity in Germany, France, and Italy.
Wall Street ended with a 2.9% rise while Japanese shares added 2% and Chinese shares rose 2.4%.
Bond yields were basically flat in Germany and Japan but fell in the US and the Australian 10-year bond yield fell below 2% for the first time since 2016 as weakening economic data added to expectations for RBA rate cuts, according to the AMP’s Chief Economist, Shane Oliver.
The Australian 10-year bond ended at 1.98%, while the US 10 year treasury bond closed at 2.59%.
Commodity prices were mostly higher, the $A also rose slightly (up 0.40 of a cent to 70.86 cents) as the $US slipped.
Wall Street ended higher Friday, with the S&P 500 and the Nasdaq finishing at four-month highs in a show of strength given the continuing uncertainties about Brexit, the Chinese economy, trade wars and the strength of the US and European economies.
The S&P 500 index added 14 points, or 0.5%, to end at 2,822.48 and the Nasdaq advanced 57.62 points, 0.8%, to 7,688.53. The Dow rose 138.93 points, or 0.5%, to finish the week at 25,848.87.
For the week, the Dow rose 1.6%, and the Nasdaq rallied 3.8%, index’s strongest since December 28, while the S&P 500 added 2.9% for its biggest weekly gain since November 30, according to the FactSet financial data group.
