NEW YORK: US stocks jumped while European indexes were mixed on Wednesday (Mar 19) as the Federal Reserve held interest rates steady after a policy meeting – and gold hit a new record as geopolitical concerns returned to the fore.
The US central bank’s rate decision was widely expected, although it also cut its growth forecast for 2025 and hiked its inflation outlook.
The Fed has nonetheless pencilled in two rate cuts this year.
But yields on the 10-year US Treasury note, a closely watched proxy of monetary policy, dropped sharply as the Fed slowed the rate at which it will shrink the size of its balance sheet.
“I think the market liked hearing the Fed Chair sound reasonably upbeat about the economy,” said Briefing.com analyst Patrick O’Hare.
He noted that the drop in Treasury yields boosts expectations that mortgage rates will also fall.
On Wednesday, Fed Chair Jerome Powell said “uncertainty today is unusually elevated” and noted that at least part of a recent inflation uptick was related to US President Donald Trump’s tariff policies.
He also signalled some confidence about the US economic outlook, noting that key indicators have stayed solid despite surveys showing weakening consumer confidence.
Investors have been eagerly awaiting Powell’s comments about how the bank seeks to chart a path through the economic turbulence unleashed by Trump’s ever-changing tariffs approach.
Many economists have warned that the tariffs – which are being met with retaliation by some countries – will tip the US economy, and possibly others, into recession.
Wall Street stocks closed notably higher.
In Europe, Paris rose, London was flat and Frankfurt succumbed to profit-taking.
Official data showed eurozone inflation eased more than previously estimated in February, driven by a slowdown in consumer price increases in Germany.
Inflation in the single currency area slowed to 2.3 per cent last month, a slight change from the 2.4 per cent figure published on Mar 3.
Meanwhile, the price of gold, seen as a safe-haven investment, struck a record high above US$3,045 an ounce.
That came on fears of a fresh upsurge in hostilities in the Middle East after Israel launched its most intense strikes on Gaza since a ceasefire with Hamas took effect.
Oil prices edged higher, even as Hamas said it remained open to negotiations while calling for pressure on Israel to implement a Gaza truce.
Separately, Trump told Ukrainian President Volodymyr Zelenskyy that the US could own and run Ukraine’s nuclear power plants as part of his latest bid to secure a ceasefire in Russia’s invasion of its neighbour.
Zelenskyy said following their call that Kyiv was ready to pause attacks on Russia’s energy network and infrastructure, a day after Vladimir Putin agreed to halt similar strikes on Ukraine.
Elsewhere, the Turkish lira plunged to an all-time low against the dollar, after police raided the home of Istanbul’s powerful opposition mayor, Ekrem Imamoglu.
The currency hit a low of more than 40 liras per dollar after the mayor, a key opponent of President Recep Tayyip Erdogan, was detained over a corruption probe – a move denounced by his opposition CHP party as a “coup”.
Trading on the Istanbul stock exchange was temporarily halted and it finished the day 8.7 per cent lower.
The yen gave up initial gains against the dollar after the Bank of Japan kept interest rates on hold, warning about “high uncertainties” including overtrade.
