US equity futures dropping and European stocks rising
A split mood emerged across major markets on Thursday, with US equity futures dropping and European stocks rising as investors processed a slew of fresh policy decisions following the Federal Reserve rate cut. The euro strengthened versus the dollar.
Contracts on the three main U.S. equity indexes all dropped. The Europe Stoxx 600 pushed higher, led by banks, as a new round of TLTRO loans kicked in. Treasuries advanced steady while European government bonds slipped. Shares fell in Hong Kong and edged up in Shanghai. China’s yuan dropped as traders weighed the odds of the People’s Bank of China lowering borrowing costs.
Thursday’s slate of monetary policy decisions, hot on the heels of the Fed cut, comes just as the OECD cut its world growth forecast to just 2.9% from 3.2% as intensifying trade conflicts take a toll on confidence and investment. But not all policy makers followed the Fed — in Switzerland and Taiwan they opted to keep rates unchanged, while in Norway officials surprised traders with a rate hike.
“Strains to the macro backdrop should ease in the coming months as other central banks (ECB, BoJ) edge toward renewed monetary easing,” Simon Ballard, a macro strategist at First Abu Dhabi Bank, wrote in a note. New dovish pressures may also come from “a particularly disorderly Brexit, further oil market disruptions or a sharp decline in market liquidity,” he said.
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