Wall Streets buoyant as US Fed signals interest rate cut

JUSTIN LANE

Traders work on the floor of the New York Stock Exchange at the start of the trading day in New York, New York, USA, 30 July 2015.

Wall Streets buoyant as US Fed signals interest rate cut


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US shares rallied on Wednesday as the Federal Reserve chairman Jerome Powell signalled a move towards cutting interest rates, in a “weak(er) dollar” policy that could boost exports.

US interest rates currently stand between 2.25% and 2.50%.

The benchmark S&P 500 surged past 3,000 points while the Dow Jones and Nasdaq rose almost 1%.

Although Powell told the House of Representatives Financial Services Committee that he expects continued US growth, he warned that weaker growth of other trading partners and a downturn in business investment would inevitably affect the US outlook.

Powell has not committed to lower rates but his reference to below-target inflation points to that direction. A binding decision is expected on July 31st.

US Treasuries currently yield higher than Greece, after the European Central Bank (ECB) has signalled the second wave of quantitative easing given a slowdown in Europe’s export-driven economy. On Monday Greece’s benchmark 10-year bond yield briefly touched 2.01%, slightly lower than equivalent US Treasuries.

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