The mixed reaction came after Fed Chairman Jerome Powell said at an event Tuesday that the central bank has been waiting to cut its main interest rate, which is at its highest level since 2001, because it first needs more confidence inflation is heading sustainably down to its 2% target
Global shares were trading mixed Wednesday, as expectations resurfaced that U.S. interest rates may stay high for a while.
France’s CAC 40 soared 1.1% in early trading to 8,016.66, while Germany’s DAX added 0.5% to 17,854.58. Britain’s FTSE 100 gained 0.5% 7,861.43. U.S. shares were set to edge higher with Dow futures up 0.2% at 37,798.97. S&P 500 futures advanced 0.3% to 5,106.75.
In Asia, Japan’s benchmark Nikkei 225 slipped 1.3% to close at 37,961.80. Australia’s S&P/ASX 200 edged down around 0.1% to 7,605.60. South Korea’s Kospi declined around 1.0% to 2,584.18. Hong Kong’s Hang Seng was little changed, inching up to 16,251.84, while the Shanghai Composite climbed 2.1% to 3,071.38.
The mixed reaction came after Fed Chairman Jerome Powell said at an event Tuesday that the central bank has been waiting to cut its main interest rate, which is at its highest level since 2001, because it first needs more confidence inflation is heading sustainably down to its 2% target.
Appetite for risk-taking remains weak, with Fed Chair Jerome Powell validating a later timeline for rate cuts, alongside a number of Fed speakers calling for more patience in easing, according to Yeap Jun Rong, market analyst at IG.
Powell suggested if higher inflation does persist, the Fed will hold rates steady “for as long as needed.” But he also acknowledged the Fed could cut rates if the job market unexpectedly weakens.
The recent data have clearly not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence, Powell said, referring to a series of reports this year that showed inflation remaining hotter than forecast.
Traders are mostly betting on the Fed delivering just one or two cuts to interest rates this year after coming into 2024 expecting six or more.
