ASX set to retreat, Wall Street drifts as Fed makes no move on interest rates; $A slumps
The S&P 500 was edging down by 0.1 per cent in afternoon trading, coming off its first loss after setting all-time highs for six successive days. The Dow Jones swung to a loss of 310 points, or 0.7 per cent, in mid-afternoon trade, and the Nasdaq composite was down 0.2 per cent.
The Australian sharemarket is set to slide, with futures at 4.53am AEST pointing to a loss of 30 points, or 0.3 per cent, at the open. The ASX added 0.6 per cent on Wednesday. The Australian dollar fell sharply. It was 1.2 per cent lower to 64.30 US cents at 5.07am.
In the bond market, Treasury yields gave back some of their gains from the morning, when a report suggested the US economy's growth was much stronger during the spring than economists expected. It grew at a 3 per cent annual rate, according to an advance estimate, a full percentage point more than forecast. But underlying trends beneath the surface may be more discouraging.
'Cutting through the noise of the swings in imports, the economy is still chugging along, but it is showing signs of sputtering,' said Brian Jacobsen, chief economist at Annex Wealth Management.
The data reinforced the dilemma facing Fed officials as they voted Wednesday on what to do with interest rates. They could have lowered rates, which would give a boost to the economy as Trump has so been angrily calling for. But lower rates could also give inflation more fuel when Trump's tariffs may be set to increase prices for US households.
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Trump on Wednesday announced a 25 per cent tariff on imports coming from India, along with an additional tax because of India's purchases of Russian oil, beginning on Aug. 1. That's when stiff tariffs Trump has proposed for many other countries are also scheduled to kick in, unless they reach trade deals that lower the rates.
Fed Chair Jerome Powell has been insisting that he wants to see more data about how tariffs are affecting inflation and the economy before the central bank makes its next move, and he will speak shortly to offer more details about the decision.
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