Friday 22 March 2019

US tech stocks rally but Boeing shares fall again as jets are grounded

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange (NYSE)

The rally in US technology stocks continued yesterday, with Apple and Visa leading the pack as investors grew confident the Federal Reserve won't rush to raise rates. Boeing and Brexit otherwise dominated headlines, as the planemaker's woes deepened and the pound fell before a key vote.

The Nasdaq 100 took its two-day advance toward 3pc after wobbling earlier in the session, as volumes remained muted. An unexpectedly weak US inflation reading bolstered most shares on speculation the Fed can hold rates steady as the economy finds its footing. The Dow Jones Industrial Average was lower after Boeing's two-day rout topped 11pc when Europe's aviation authority grounded the aircraft maker's 737 Max.

The 10-year Treasury yield slumped, and crude oil rose after Saudi Arabia was said to extend deep supply cuts.

"I expect equity markets to remain volatile and to tread water, and there is still too much risk in risk assets. Ultimately I think bond yields will head lower, but this is a process that unfolds - it's not a sudden event," said Suzanne Hutchins, a senior portfolio manager at Newton Investment Management.

The pound whipsawed amid the Brexit drama, rising overnight after UK Prime Minister Theresa May came back from Europe with a new deal. It tumbled as much as 1.1pc versus the dollar as UK Attorney General Geoffrey Cox said the risks surrounding the Irish backstop were unchanged, and also fell after Mrs May's deal was rejected by parliament.

Alongside Brexit developments, investors have a slew of economic data to digest this week. The inflation reading came amid falling prices for cars and prescription drugs, adding to evidence the American economy is in no danger of overheating. In the coming days the focus will turn to Chinese production and retail sales, as well as a Bank of Japan policy decision.

Bloomberg

Irish Independent

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