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U.S. stocks fell and the dollar strengthened amid concerns about slowing global growth. Here are some of the things people in markets are talking about.
Trump Eyes Markets Ahead of 2020
President Donald Trump is pushing U.S. negotiators to get a trade deal done with China in hopes the big win and the potential bump it would produce in the stock market would buoy his reelection chances. As trade talks with China advance, Trump has noticed the market gains that followed each sign of progress, and expressed concern that the lack of an agreement could drag down stocks, according to people familiar with the matter. Top White House staff know to be aware of how markets are performing when summoned to the Oval Office to speak with Trump because the president often asks: ‘‘What’s happening with the markets?’’ A new trade accord would also provide Trump with a much-needed win after the collapse of his summit with North Korean leader Kim Jong Un.
Shares in Asia looked set for a muted start after stocks dropped on Wall Street. U.S. equities fell to a three-week low on concern about the outlook for growth after fresh data pointed to a slowing economy before a key jobs report Friday. Energy and health-care companies led losses on the S&P 500 Index, sending the gauge toward its worst week of the year after reports showed the U.S. trade deficit widened in 2018 to a 10-year high and private companies added fewer employees than analysts forecast last month. Commodities were led lower by oil after a bigger-than-expected buildup in U.S. crude stockpiles. Government bonds rallied as investors sought out defensive assets, while the Bloomberg Dollar Spot Index rallied for a sixth session.
ECB Set to Give More Loans to Banks
European Central Bank officials are getting ready to cut their economic forecasts by enough to justify another round of loans for banks, which would help ease financial conditions on the continent. The forecasts won’t be official until President Mario Draghi unveils them after policy makers meet Thursday. The ECB is the latest central bank to respond to a slowdown that’s gripped the global economy since last year. The Federal Reserve has already put its rate-hike cycle on pause, the Bank of England has cut its economic outlook and China lowered its growth target this week.
OECD Cuts Growth Outlook Again
The global economy is suffering more than expected from trade tensions and political uncertainty which are clouding prospects particularly in Europe, according to a gloomy report from the Organisation for Economic Co-operation and Development. “The global expansion continues to lose momentum,’’ the Paris-based institution said as it downgraded almost every Group of 20 nation’s economy. The OECD’s numbers are more downbeat than the IMF’s for many economies, particularly the euro region and the U.K., as the organization warns that things could get worse.
More Wait and See From Fed
The U.S. can afford to “wait” and watch incoming economic data amid a slowdown in U.S. growth before making another policy move, New York Fed President John Williams said. “The base case outlook is looking good, but various uncertainties continue to loom large," Williams said Wednesday during a speech in New York. “Therefore, we can afford to be flexible and wait for the data to guide our approach.” He cited the market turmoil among factors weighing on the economy, alongside a slowdown in global growth and geopolitical risks such as Brexit and the U.S.-China trade dispute. Fed officials have signaled they’re undecided about whether they will continue raising interest rates this year following a quarter-point hike in December. The decision contributed to a bout of financial-market volatility that extended into January.
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