Financial sector experiences stability following Trump's dismissal of impending job threat against Federal Reserve Chairman Jerome Powell
In the world of finance, a tense relationship between President Donald Trump and Federal Reserve Chair Jerome Powell continues to create waves. Trump's criticism of Powell, primarily due to the Federal Reserve's decision not to cut interest rates this year, has left the future of monetary policy uncertain.
This week, the S&P 500 experienced a dip of about 0.7% when reports surfaced that Trump might dismiss Powell. However, the market rebounded when Trump moderated his remarks, with the S&P 500 closing up 0.3%, the Dow Jones Industrial Average rising by 231 points (0.5%), and the Nasdaq composite increasing 0.3%, nearly reaching its previous record.
The ongoing dynamic between Trump and Powell has produced volatility in the stock market, as investors react to the uncertainty about Fed leadership and the central bank’s future policy direction.
Elsewhere in the global market, the Dow Jones Industrial Average futures lost 0.2%, while the euro slipped to $1.1579. However, the U.S. dollar rose to 148.73 Japanese yen, and South Korea's Kospi climbed 0.2%. Britain's FTSE 100 added 0.4% at midday, and the Shanghai Composite index gained 0.4%.
In Asia, Tokyo's Nikkei 225 index gained 0.6%, while the Hang Seng in Hong Kong shed early gains to close down 0.1%. Australia's S&P/ASX 200 advanced 0.9%, and Germany's DAX gained 0.8% at midday. The CAC 40 in Paris rose 0.9%, and the SET in Bangkok jumped 3.3%.
In company news, United Airlines' second-quarter revenue came in a touch lower than expected, causing its shares to dip 1.6% overnight. However, PepsiCo shares rose 2% before the bell Thursday after the company's second-quarter sales and profit topped Wall Street projections.
Meanwhile, Trump's new complaint about Powell involves cost overruns on the $2.5 billion renovation project at the Fed's Washington headquarters. The President has also criticised Coca-Cola for not using real cane sugar in its flagship soft drink in the U.S., which led to a dip in shares for Ingredion and Archer-Daniels-Midland.
As for the energy sector, Brent crude picked up 6 cents to $68.58 per barrel, while U.S. benchmark crude oil gained 30 cents to $66.68 per barrel.
New data on jobs and retail sales are due early Thursday, and Netflix is set to report earnings after markets close. Taiwan Semiconductor Manufacturing Co. (TSMC) reported huge increases in sales and profit from a year ago, signalling a positive trend in the tech sector.
Wall Street appears calm after Trump walked back his earlier threats to fire Powell, suggesting a degree of stability returning to the market. However, the ongoing tension between Trump and Powell continues to cast a shadow over the economy, with investors keeping a close eye on developments.
- The ongoing tension between President Trump and Federal Reserve Chair Jerome Powell, influenced by the former's criticism of Powell due to the Fed's decision not to cut interest rates this year, has created uncertainty in the world of finance and politics.
- In Seattle, the economic landscape is under scrutiny as the dynamic between Trump and Powell affects the general news and business, causing volatility in the stock market and creating uncertainty among investors.
- Jobs and retail sales data, due for release early Thursday, could provide insights into the current state of the economy, which remains under the shadow of the ongoing political and financial disagreement between Trump and Powell.
- Investors are closely monitoring the relationship between Trump and Powell, as it affects not only the financial sector but also other industries such as business, finance, and jobs.
- The tech sector, as represented by Taiwan Semiconductor Manufacturing Co. (TSMC), has shown positive trends, signaling a potential bright spot amidst the broader uncertainty caused by the Trump-Powell tension.
