Gold prices hit 2-week high as Trump-Fed feud escalates with Cook firing
* MSCI world equity index falls for third straight day
* European shares bounce on ECB inflation revamp report
* Oil slumps as production pick-up eyed
(Updates with close of U.S. markets, oil settlement prices)
By Chuck Mikolajczak
NEW YORK, July 18 (Reuters) - A gauge of global stocks
advanced on Thursday, erasing declines on a late rally after
comments from a U.S. Federal Reserve policymaker heightened
expectations for a rate cut, while oil prices dropped on
forecasts of rising output.
In a speech read as a strong argument in favor of quick and
aggressive action by the Fed to cut rates this month, New York
Fed President John Williams said policymakers need to add
stimulus early to deal with too-low inflation when rates are
near zero. "In all the Fed speak we've had... it seems like the ones
that are more interested in cutting are more visible," said
Thomas Martin, senior portfolio manager at Globalt Investments
in Atlanta, Georgia.
"Today is an indication the market feels better if they know
the central banks are going to be accommodative; that is the
messaging you get from the markets."
Expectations the Fed will cuts rates by a half a percentage
point jumped to 71%, according to CME's FedWatch tool, up from
34.3% on Wednesday. Williams' comments led to a turnaround in stocks on Wall
Street, where shares were lower for a majority of the session in
part due to disappointing results from Netflix NFLX.O , which
plunged 10.27%. Honeywell HON.N , up 3.12%, was a bright spot as its
results topped expectations and raised its full-year outlook.
However, the diversified manufacturer said it is planning
"somewhat cautiously" for the second half due to volatile
geopolitical and economic issues. Earnings are now expected to show growth of 0.6% for the
second quarter, according to Refinitiv data. S&P 500 companies
were expected to show a decline as recently as Tuesday.
U.S. and Chinese officials were scheduled to have a phone
call on trade later on Thursday, U.S. Treasury Secretary Steven
Mnuchin said in an interview along the sidelines of the G7
meeting in Chantilly, France, potentially opening the door for
direct talks to resume. The Dow Jones Industrial Average .DJI rose 3.12 points, or
0.01%, to 27,222.97, the S&P 500 .SPX gained 10.69 points, or
0.36%, to 2,995.11 and the Nasdaq Composite .IXIC added 22.04
points, or 0.27%, to 8,207.24.
The Euro STOXX 600 .STOXX managed to close off its lows on
hopes of looser monetary policy from the European Central Bank.
The pan-European STOXX 600 index .STOXX lost 0.22% and
MSCI's gauge of stocks across the globe .MIWD00000PUS gained
0.17%.
In commodities, oil slumped more than 2% on expectations
crude output would rise in the Gulf of Mexico following last
week's hurricane in the region. U.S. crude CLcv1 settled down 2.61% at $55.30 per barrel
and Brent LCOcv1 was last at $61.93, down 2.72% on the day.
U.S. Treasury yields fell in the wake of Williams' comments,
reversing course after separate reports showed manufacturing in
the U.S. mid-Atlantic region rebounded and the labor market
remained healthy, pushing yields higher. Despite a flurry of strengthening economic data recently,
market participants consider it a certainty the Federal Reserve
will cut rates by at least a quarter of a percentage point at
its July 30-31 meeting. Benchmark 10-year notes US10YT=RR last rose 9/32 in price
to yield 2.0294%, from 2.061% late on Wednesday.
In currencies, the dollar also weakened following the
remarks from Williams, while the euro lost ground following a
report the European Central Bank's staff is studying a potential
change to its inflation goal.
The dollar index .DXY fell 0.53%, with the euro EUR=
up 0.47% to $1.1276.
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Global assets in 2019 http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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