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Home / Business / World shares rally as Trump raises pressure on Fed to cut the course price Business

World shares rally as Trump raises pressure on Fed to cut the course price Business



Stock markets have been bolstered by the growing prospect of more stimulus measures by central banks and governments around the world as Donald Trump exerted more pressure on the Federal Reserve to reduce interest rates.

Despite claiming that the US economy was and doing "tremednously well," the US president stepped up his campaign to force Fed Chairman Jerome Powell to cut borrowing costs by a full percentage point to encourage growth.

Trump even suggested that the Fed might also reintroduce the controversial policy of quantitative easing, or money printing, which became groundbreaking when the global economic system collapsed in 2008.

Donald J. Trump
(@ realDonaldTrump)

….. The rate, in a short time, should be reduced by at least 100 basis points, with perhaps some quantitative relief as well. If that happened, our economy would be even better, and the world economy would be greatly and rapidly improved – good for everyone!


19. August 2019

Trump's latest intervention to force Powell's hand – which he appeared to explicitly link to his 2020 reelection campaign – saw Pacific Asia stocks rise on Tuesday due to gains on Wall Street the day before.

Nikkei in Tokyo increased 0.4%, ASX200 in Sydney rose 0.7% and Kospi in Seoul jumped 0.4%. However, shares in Hong Kong and Shanghai were down. The FTSE100 was expecting to open slightly on Tuesday's trading session.

The gains went toward reversing losses inflicted last week when billions of dollars were wiped out from stock values ​​amid concerns about the US-China trade war, a possible US recession and a crystallizing decline in China and Germany.

The two latter countries have been quick to respond. Beijing eased the company's borrowing costs on Tuesday by introducing a new benchmark lending rate, and the German finance minister on Monday suggested the government could dip into its coffers and spit up to € 50bn (£ 45.7bn) of extra spending.

"There are expectations of looser monetary policy around the world, and this dampens markets against recent uncertain developments," said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management in Tokyo.

"China is willing to do a lot for the economy. I hope to hear more about tax spending in Germany. Central banks have no choice but to ease. The remaining question is what comes from fiscal policy."

But investors now overwhelmingly expects the Fed to cut interest rates again at its political meeting on September 17-18, with the Fed cutting its interest rates in July for the first time in ten years to dampen the effects of the US-China trade series and a global slump. , but almost two points higher than the years after the 2008 crisis when it dropped to 0.5%.

Analysts will now shift focus to release minutes from the Fed's July meeting due out on Wednesday. Jackson Hole Seminar and the G7 Summit in Biarritz this weekend on clues about what further steps politicians will take to boost growth.

John Abernethy, Clime Asset Management in Australia, predicted they said the Fed would once again go ahead and reintroduce quantitative easing as the US budget deficit continues to blow in line with Trump's tax cut.

"President Trump has begun to force the Fed to further cut cash rates, and the Fed will succumb and justify their decision by focusing on slowing economic growth in the world," he told livewire.com.au. "It is actually possible, given the clutter created by both the trade war and QE, that the Fed can go faster than many now predict."


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