Global stocks soar on dovish Fed, strong USA jobs data

Global stocks soar on dovish Fed, strong USA jobs data

Global stocks soar on dovish Fed, strong USA jobs data

In response to criticism from President Donald Trump, Federal Reserve Chairman Jerome Powell said he would not resign if he were asked.

A new jobs report on Friday showed United States employers added more than 300,000 jobs in December - well above expectations.

"We're hearing a lot from different groups of people about the role that the balance sheet normalisation may be playing in the markets, " Powell said.

Powell triggered an additional surge in the markets after he walked back the comment made in December that shook up investors and made him sound like his sole mission was to reduce the central bank's balance sheet. Trump has been complaining that a raise in interest rates would slow down the economy. Technology stocks, which have been especially volatile in recent months, were among the biggest gaining.

Equities all over the globe had experienced a rally on Friday, the 4th of December, after steep declining earlier this week, as trade-talk hope signaled a relief for the investors and dovish Fed helped to overhaul market momentum, as Fed Chair Jerome Powell had said that the U.S. central bank would be patient with the monetary policy.

In the cash market, the benchmark S&P 500 Index settled at 2531.94, up 84.05 or +3.17%.

Private economists viewed Powell's comments as a strong signal that the Fed, which in December had projected another two rate hikes in 2019, may end up deciding to pause hikes for several months. But some investors have anxious that that process could push long-term rates higher at a time when the economy was slowing.

Powell and his colleagues at the USA central bank are weighing conflicting signals on the US economy as they try to ensure that the Fed achieves its congressional mandate of low, stable inflation and full employment over the long term.

Trump has complained that the Fed has pushed rates higher despite the fact that there is no evidence that inflation was getting out of control. Under the law that governs the Federal Reserve, a president can only remove a Fed chairman for cause.

"Longer-term bonds have sold off here today in price", said Tim Ghriskey, chief investment officer at Inverness Counsel in NY. "We are always prepared to shift the stance of policy and to shift it significantly" if needed. "The Fed has wilfully ignored trade and interest rate risks while talking a hawkish game".

Analysts predicted that job reports for January and February will be more of a policy reference for the Fed than the December report as they would provide a clearer picture of how tightened financial conditions affect the US economy.

"I'll just say that we are listening carefully to that., listening sensitively to the message that markets are sending, and we are going to be taking those downside risks into account as we make policy going forward".

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