London stocks low at week opening

London’s stock market kicked off the week with a subdued performance. The blue-chip FTSE 100 index dipped 0.2 per cent on Monday, following its best week since May, while the mid-cap FTSE 250 remained flat.

Aerospace and defence stocks led the declines, with the sector falling 1.3 per cent after European defence shares dropped due to reports that Germany would not approve new military aid for Ukraine. BAE Systems saw a 2 per cent drop, while Rolls-Royce and Chemring were down over 1 per cent each.

Energy shares also edged down 0.2 per cent on lower crude prices, and banks fell 0.1 per cent. In contrast, precious and industrial metal miners gained 0.7 per cent, buoyed by gold trading near historic highs and copper prices rising due to reduced recession fears and easing concerns about Chinese demand.

Real estate stocks saw slight gains after Rightmove reported increased buyer interest following the Bank of England’s rate cut. Investor sentiment was supported by optimism over a potential US rate cut, with upcoming US Federal Reserve Chair Jerome Powell’s speech at Jackson Hole being closely watched.

In individual stock movements, Plus500 surged 4.1 per cent, topping the FTSE 250 index after the online trading platform forecasted annual results above market expectations and reported a 13 per cent rise in new customers for the first half of the year.

Attribution: Reuters

 

Subediting: M. S. Salama

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Powell: Tariff effects remain uncertain with a wide range of possibilities

US Federal Reserve Chair Jerome Powell said on Wednesday the potential effects of tariffs are highly unpredictable, with a “very, very wide” range of possibilities. Speaking to a press conference, Powell highlighted the uncertainty around the duration, scope, and targeted countries, as well as the potential for retaliation and how tariffs might impact consumers.

“The range of possibilities is very, very wide,” he said. “We don’t know for how long or how much, what countries. We don’t know about retaliation. We don’t know how it’s going to transmit through the economy to consumers. That really does remain to be seen.”

He explained that while the Fed has studied historical data and economic literature to understand the factors at play, the true effects of tariffs remain unclear.

Powell further stated that the US central bank would be carefully watching the Trump administration’s new policies on tariffs, immigration and more but would not rush a response.

“We need to let those policies be articulated before we can even begin to make a plausible assessment of what their implications for the economy will be,” he noted. “This is no different than any other set of policy changes at the beginning of an administration. We’ll patiently watch and understand and not be in a hurry to get to a place of understanding what our policy response should be until we see how it plays out.”

Attribution: Amwal Al Ghad English

 

US Fed in no rush to cut rates again – Powell

US Federal Reserve Chair Jerome Powell made it clear that the central bank is in no rush to adjust its monetary policy, particularly given the strength of the economy.

During the press conference, Powell stated that the Fed would need to see “real progress on inflation or some weakness in the labour market” before considering any changes to its current stance.

Powell reiterated the Fed’s commitment to its 2 per cent inflation target, emphasising that this goal remains unchanged. Regarding the Federal Open Market Committee’s upcoming review of its monetary policy framework, Powell clarified that the 2 per cent inflation target would not be up for discussion.

“The committee’s 2% inflation goal will be retained and will not be a focus of the review,”

The central bank decided to keep interest rates unchanged in January, following three consecutive meetings where rates were cut.

Attribution: Amwal Al Ghad English

Fed’s Powell: Too soon to assess impact of Trump’s policies on economy

US Federal Reserve Chairman Jerome Powell stated on Wednesday that it remains too soon to determine how President-elect Donald Trump’s proposed economic policies might influence the US economy or affect the central bank’s monetary decisions.
Speaking at a press conference after the Federal Open Market Committee’s latest meeting, Powell emphasised the uncertainty surrounding the specifics of Trump’s policies.
“… it’s very premature to make any kind of conclusions. We don’t know what will be tariffed, from what countries, for how long, in what size,” Powell noted.
“We need to take our time, not rush” and see what the new president delivers, he added.
As the Federal Reserve monitors the evolving economic landscape, Powell’s comments signal the central bank’s cautious stance in navigating potential policy shifts under the incoming administration.

US Fed is not ‘looking for a law change’ to own bitcoin

US Federal Reserve Chair Jerome Powell said on Wednesday that the central bank has no plans to add bitcoin to its balance sheet.
“We’re not allowed to own bitcoin. The Federal Reserve Act says what we can own, and we’re not looking for a law change. That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed,” Powell stated.
Meanwhile, President-elect Donald Trump has shown support for the cryptocurrency industry during his campaign and has even floated the idea of establishing a strategic reserve of bitcoin.

Powell describes Wednesday’s rate cut a ‘closer call’ but ‘right call’

US Federal Reserve Chair Jerome Powell described Wednesday’s decision to cut interest rates as a “closer call,” though he emphasised it was ultimately the right choice to support the central bank’s dual mandate.
“I would say today was a closer call, but we decided it was the right call because we thought it was the best decision to foster achievement of both of our goals, maximum employment and price development,” Powell told the press conference.
He explained that moving too slowly could harm economic activity in the labour market, while moving too quickly might jeopardise progress on inflation. The Fed is aiming to navigate carefully between these two risks.
Looking ahead, Powell noted that any rate cuts implemented by the Fed in 2025 would depend on incoming data rather than current projections.
“I think the actual cuts that we make next year will not be because of anything we wrote down today. We’re going to react to data; that’s just the general sense of what the committee thinks is likely to be appropriate,” Powell said, addressing the revised forecast of two quarter-point rate cuts for 2025, down from an earlier projection of four.
Powell added: “But as for additional cuts, we’re going to be looking for further progress on inflation as well as continued strength in the labour market. And as long as the economy and the labour market are solid, we can be cautious as we consider further cuts.”