Thursday 30 March 2017 07:17 AM
While you were sleeping: Rosengren sees four hikes
By Margreet Dietz
March 30 (BusinessDesk) - Wall Street was mixed, following Tuesday’s rally, while the British pound weakened as the UK
formally began its exit from the European Union.
Meanwhile, US Federal Reserve Bank of Boston President Eric Rosengren said the "base-case" is for four interest rate
increases this year. The central bank hiked its target rate by a quarter percentage point at its most recent meeting
earlier this month, and flagged a total of three increases in 2017.
"My own view is that an increase at every other [Federal Open Market Committee] meeting over the course of this year
could and should be the committee's default, unless economic data come in inconsistent with forecasts," Rosengren said
in prepared remarks for a speech in Boston.
“The base case would be four tightenings, reflecting the strength of the economy that I believe justifies more regular
normalisation of interest rates,” according to Rosengren.
Wall Street was mixed. In 1.26pm trading in New York, the Dow Jones Industrial Average fell 0.2 percent. However, the
Nasdaq Composite Index added 0.3 percent. In 1.10pm trading, the Standard & Poor’s 500 Index inched 0.01 percent lower.
“We're going to be fairly range-bound as we get to the earnings season or until there is some significant development on
tax reforms," Michael Scanlon, portfolio manager at Manulife Asset Management in Boston, told Reuters.
The Dow moved lower as slides in shares of UnitedHealth Group and those of Travelers, down 1.2 percent and 0.8 percent
respectively, outweighed gains in shares of Merck and those of Pfizer, up 1 percent and 0.7 percent respectively.
The latest US housing data offered further signs of strength. A National Association of Realtors report showed its
pending home sales index climbed 5.5 percent to 112.3 in February, the highest in 10 months and up from 106.4 in
January.
“Buyers came back in force last month as a modest, seasonal uptick in listings were enough to fuel an increase in
contract signings throughout the country," Lawrence Yun, NAR chief economist, said in the report.
“The stock market's continued rise and steady hiring in most markets is spurring significant interest in buying, as well
as the expectation from some households that delaying their home search may mean paying higher interest rates later this
year,” Yun noted.
Shares of Vertex Pharmaceuticals soared, up 22 percent as of 1.32pm trading in New York, after the company said its
cystic fibrosis treatment succeeded in a clinical trial.
“The tezacaftor/ivacaftor combination treatment demonstrated clinically meaningful benefits, with a favourable safety
profile, across multiple patient groups," Jeffrey Chodakewitz, Vertex Executive Vice President, said in a statement.
“This combination treatment may provide a promising new option for treating the underlying cause of CF in the future and
brings us increasingly closer to our goal of developing new medicines for all people with the disease."
In Europe, the Stoxx 600 Index finished the day with a 0.3 percent increase from the previous close. The UK’s FTSE 100
Index advanced 0.4 percent, as did Germany’s DAX Index, while France’s CAC40 Index gained 0.5 percent.
The British pound weakened 0.4 percent against the US dollar, while the euro slid 0.6 percent, as UK Prime Minister
Theresa May triggered Article 50, formally beginning the country's exit from the European Union.
“We’re in for a long period of volatility for the pound and UK assets,” Neil Wilson, a market analyst at ETX Capital,
wrote in a note, Bloomberg reported. “Details are everything now.”
(BusinessDesk)
ends