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Dow falls after dovish Fed decision as Brexit chaos hammers pound
NEW YORK, March 21, 2019 (BSS/AFP) – Wall Street stocks finished a
volatile session mostly lower on Wednesday following a dovish Federal Reserve
decision, while the pound dropped amid Brexit chaos as Britain tries to avoid
a damaging no-deal exit.
US stocks rallied shortly after the Fed kept interest rates unchanged and
released a forecast for no interest rate hikes in 2019, a shift from an
earlier projection of two increases this year.
But stocks pulled back after a press conference at which Fed Chair Jerome
Powell emphasized that the US economy remained solid, even as the central
bank trimmed its growth outlook for 2019.
In the end, both the Dow and S&P 500 finished in the red, while the Nasdaq
eked out a narrow gain.
Briefing.com analyst Patrick O’Hare described the market’s initial surge
as a knee-jerk reaction to a dovish central bank that investors later
rethought.
The Fed’s dovishness “invites some concerns about what it really implies
about the global economic outlook,” O’Hare told AFP.
It raises the possibility “that US economy will disappoint,” he said,
adding that low interest rates could depress bank lending.
Cresset Wealth Advisors’ Jack Ablin said the retreat in US stocks showed
“investors are beginning to infer that the global economic slowdown is
washing up on our shores.”
– Brexit morass –
The dovish Fed decision also dragged the dollar down against both the euro
and the yen, although the US currency was higher near 2100 GMT against the
pound compared with the day-ago period.
Prime Minister Theresa May announced Britain was seeking a delay to its
exit from the European Union until June 30, as she scrambled to contain a
deepening political crisis and the risk that Britain could still crash out of
the bloc in nine days.
European Council President Donald Tusk said the EU could approve Britain’s
request for a short delay to Brexit but only if British MPs next week vote
through the withdrawal deal they have twice rejected.
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“I believe a short extension will be possible but it will be conditional
on a positive vote on the withdrawal agreement in the House of Commons,” Tusk
told reporters, a day before leaders were to gather in Brussels for a crucial
summit.
The outlook for Sterling “remains troubling as the EU prepares for the
possibility of a no-deal Brexit and rumors circulate around May’s possible
resignation,” said BK Asset Management analyst Kathy Lien.
May “is jamming the twice rejected agreement down everyone’s throats and
both parliament and the EU are putting up a fight,” Lien said.
Among individual stocks, shares of Bayer plunged nearly 10 percent after a
US jury ruled weed killer Roundup was a “substantial factor” in an amateur
gardener’s cancer, further exposing the German company to legal liability
following its takeover on Monsanto, which developed Roundup.
“This could open the floodgates to further cases, and the group might have
to set aside vast sums of money for potential cases,” said CMC Markets
analyst David Madden.
– Key figures around 2050 GMT –
New York – DOW: DOWN 0.6 percent at 25,745.67 (close)
New York – S&P 500: DOWN 0.3 percent at 2,824.23 (close)
New York – Nasdaq: UP 0.1 percent at 7,728.97 (close)
London – FTSE 100: DOWN 0.5 percent at 7,291.01 (close)
Frankfurt – DAX 30: DOWN 1.6 percent at 11,603.89
Paris – CAC 40: DOWN 0.8 percent at 5,382.66 (close)
EURO STOXX 50: DOWN 1.1 percent at 3,372.38 (close)
Tokyo – Nikkei 225: UP 0.2 percent at 21,608.92 (close)
Hong Kong – Hang Seng: DOWN 0.5 percent at 29,320.97 (close)
Shanghai – Composite: FLAT at 3,090.64 (close)
Oil – Brent Crude: UP 89 cents at $68.50 per barrel
Oil – West Texas Intermediate: UP 80 cents at $59.83 per barrel
Pound/dollar: DOWN at $1.3189 from $1.3268 at 2100 GMT on Tuesday
Euro/pound: UP at 86.52 pence from 85.56 pence
Euro/dollar: UP at $1.1412 from $1.1352
Dollar/yen: DOWN at 110.70 yen from 111.39 yen
BSS/AFP/HR/0940