NEW YORK, March 17 — Hopes for an economic recovery helped push European stock markets higher yesterday, while trading was mixed in New York with attention focused on the Federal Reserve’s much-anticipated policy meeting this week.
News that several European countries had suspended use of the AstraZeneca vaccine owing to safety concerns appeared to have little impact on continental sentiment.
The EU’s medical regulator said yesterdayit was “firmly convinced” the benefits of AstraZeneca’s jab outweigh potential risks.
Elsewhere, the dollar was mixed against its main rivals and oil prices slid on profit-taking after recent strong gains.
The US tech market Nasdaq managed a slight gain in a day that saw the S&P 500 and Dow fall back from records, while main Asian markets closed higher earlier in the day.
On the corporate front, shares in Nokia were up by less than 0.1 per cent after the Finnish telecom equipment maker said it will slash up to 11 per cent of its workforce within two years.
The firm is looking to cut costs and focus on a few key areas in the face of tough competition over super-fast 5G networks.
Fed on inflation
The Fed’s two-day policy meeting beginning yesterday is front and centre on investors’ minds as they look for its response to the rally in US bond yields that has rattled trading floors.
However, the general consensus is that policymakers will maintain their vast bond-buying scheme and keep rates at record lows until 2023.
“The Fed will probably use the excuse of unemployment being too high to keep current policies intact for a while yet to let the economy heat up further,” suggested Fawad Razaqzada, a market analyst at ThinkMarkets.
Fed boss Jerome Powell “will rely on the short-term risks to the outlook to defend his ultra-easy monetary stance,” OANDA’s Edward Moya agreed.
“The summertime is when inflation could rear its ugly head, so Powell should be able to push back any concerns until then,” he added.
Expectations for a surge in activity later this year, backed by huge government rescue packages and central bank largesse, have helped power world markets to record or multi-year highs.
However, the recovery has investors concerned about inflation that could force national banks to wind down the ultra-loose monetary policies that have helped send equities higher.
US benchmark 10-year Treasury yields — a guide to future interest rates — have reached a one-year high in recent weeks.
But as the US vaccine programme accelerates and Americans begin to get government cash handouts as part of President Joe Biden’s stimulus plan, investors are also betting that months of pent-up spending will be unleashed in the world’s top economy, a key driver of global growth.
Government data released before US markets opened showed retail sales plunging 3.0 per cent and industrial production falling 2.2 per cent, in what analysts viewed not as a warning sign for the wider economy but merely the result of harsh winter weather. — AFP
