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Wall Street stock markets faltered, but remained close to record highs ahead of U.S. employment data on Friday, which could lift pressure on the Federal Reserve to rethink its monetary policies extremely solidarity.
The S&P 500 rose 0.3% at lunchtime in New York. However, it remained just below the all-time high reached late last month after a long rally backed by the Fed and other central banks. triggering trillions of dollars in financial markets in pandemic emergency spending programs.
The technology-focused Nasdaq Composite index, which is crowded with growing companies that are sensitive to changing interest rate expectations, fell 0.1%, avoiding the heaviest losses at the start of the day. The European Stoxx 600 closed 0.2%, but was also just below the record high reached in mid-April.
With the American economy now closing in recovering from losses caused by coronavirus closures, economists expect the U.S. government to report on Friday that the country’s employers created 1 million new jobs in April. Investors will examine the non-farm payroll report for clues to possible upcoming Fed moves, which yes dit it will continue to spend $ 120 billion a month on bond purchases until the job market recovers.
Up to 1.5 million jobs “would not be enough for the Fed to change,” Standard Chartered analysts said. “Between 1.5 and 2 m, there is likely to be uncertainty about the Fed’s perceptions.”
Monica Defend, head of research at Amundi, said the fact that the US and European stock markets were trading around record highs was “worrying”. The current market narrative about economic recovery and the rapid improvement in corporate profits, driven by a supportive monetary policy, “has become too complacent,” he said.
The ten-year Treasury yield, which fell 0.03 percentage points to 1.56% on Thursday, was “inconsistent with a U.S. economy recovering at such a rapid pace,” he added.
Amundi, Europe’s largest fund manager, was now “gaining profits in equity positions in developed markets”.
Central bankers around the world had a strong “communications challenge” around the possible withdrawal of emergency monetary support measures, said Roger Lee, head of Investec’s equity strategy in the UK United.
“If ordered, you can expect a smooth continuation of this year’s stock market rotation” from blockchain beneficiaries, such as technology stocks, to economically sensitive companies such as oil producers and banks, Lee said. “If it’s messy, it will be about ‘selling what you can.'”
Thursday the Bank of England Updated their growth forecasts for the UK economy, but they stopped following a step by Canada to reduce your asset purchases.
The BoE kept the size of its quantitative easing program at £ 895 billion, while keeping its key interest rate at a record low of 0.1 per cent. The British central bank added that while its asset purchases “could now slow down a bit” after it became dominant buyer of the UK’s public debt last year, “this operational decision should not be construed as a change in the stance of monetary policy”.
The pound fell 0.1 percent against the dollar to $ 1.389.
The dollar, measured against a currency basket of trading partners, weakened 0.4%. The euro gained 0.4% to $ 1,205.
Brent crude fell 0.7% to $ 68.46 a barrel.
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