Wednesday, August 21, 2019 | ePaper

Stocks rally as rate cut prospect offsets trade war tensions

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AFP, London :
Stock markets extended their strong run higher on Tuesday, with the prospect of a US interest rate cut helping to offset trade war tensions according to traders.
The dollar was mixed against main rivals, while the pound won support from official data showing UK unemployment held at a 45-year low point with a rate of 3.8 percent.
"Safe to say, the changing expectations for interest rates is the primary reason for such a strong rebound in the (stock) markets that didn't look particularly likely at the start of last week," said Oanda senior market analyst Craig Erlam.
"Once again, it's central banks that are left to fill the economic void, easing investor fears over trade wars and a global slowdown."
Friday's weak US jobs report has increased expectations that the Federal Reserve will look to cut interest rates, weighing on the dollar but boosting stock markets around the world.
Brexit uncertainty has meanwhile reduced expectations of a rate hike from the Bank of England any time soon, while the European Central Bank has vowed support to stimulate a struggling eurozone economy.
Rising prospects of a US rate cut come as President Donald Trump has threatened new tariffs against Beijing amid an escalating trade war.
Trump said a meeting with Chinese President Xi Jinping had been "scheduled" during the G20 summit in Japan later this month.
But China on Tuesday did not confirm any meeting.

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