Business_news Stocks are jumping as traders bet Fed Chair Jerome Powell will signal more interest-rate cuts in his speech today


Associated Press

  • Global stocks and oil plunged on Friday after China announced it would slap tariffs on $75 billion worth of US goods.
  • The tariff schedule matches the US, with some taking effect on September 1 and the remainder on December 15.
  • Stocks rose earlier on Friday as traders hoped for Fed Chair Jerome Powell to signal a rate cut in September.
  • View Markets Insider’s homepage for more stories.

Global stocks and oil prices dropped on Friday after China retaliated against upcoming US tariffs by announcing duties on $75 billion worth of US goods.

China’s tariff schedule matches the US timeline, with some duties taking effect on September 1 and the remainder on December 15. The second tranche includes a 25% tariff on US auto imports.

“China is back with vengeance and today’s action has taken the ongoing trade war between the two countries into another territory,” Naeem Aslam, chief market analyst at TF Global Markets UK, said in research note.

“The biggest fear for markets is now is the counter reaction from Donald Trump, who has been giving the wrong signal to markets that the trade war issue isn’t a problem.”

News of the tariffs hammered oil prices in particular.

“We have seen the biggest drop in the oil market as traders know that this trade war is going to impact the global grow,” Aslam said. “In terms of equity markets, the only trade is to sell and get out of it.”

Here’s the market roundup as of 8:52 a.m. EST:

  • US stocks opened lower. The Dow Jones Industrial Average slid 0.3%, the S&P 500 fell 0.4%, and the Nasdaq dropped 0.5%.
  • European equities regained ground with Germany’s DAX and the Euro Stoxx 50 flat, and Britain’s FTSE 100 up 0.3%.
  • Asian indexes closed higher with China’s Shanghai Composite and Hong Kong’s Hang Seng up 0.5%, while Japan’s Nikkei rose 0.4%.
  • Oil prices plunged with West Texas Intermediate crude down 2.4% at about $54 a barrel, and Brent crude down 1.4% at $59.10.
  • Gold rallied by 0.5% to $1,516.

Stocks rose earlier on Friday as traders wagered Federal Reserve Chair Jerome Powell will confirm an expected cut to interest rates in September during his speech in Jackson Hole, Wyoming today.

“To say that the stakes are high for the meeting is an understatement,” Jasper Lawler, head of research at London Capital Group, said in a morning note. “Powell will take to the stage less than a month after the Fed’s first interest rate cut in a decade and amid market expectations of another cut next month.”

Markets are pricing in about a 94% chance of a rate cut in September, Lawler said. A surprise contraction in domestic manufacturing activity this month, according to IHS Markit data released this week, has fueled hopes of central bank action.

President Donald Trump is also pressuring Powell and the Fed to take more aggressive action, and has called for a cut of 100 basis points.

However, employment and retail sales data have remained strong, pointing to a robust US economy. Three of the Fed’s policymakers – Esther George, Patrick Harker, and Eric Rosengren —are also opposed to further rate cuts.

“Unless the hard economic data suggest a steep decline in the US economy’s trajectory, then policymakers need not embark on a major easing cycle,” Han Tan, market analyst at FXTM, said in a morning note. “Instead, they can be contented with just some ‘insurance’ rate cuts.”