Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


While you were sleeping: Fed’s Bullard scares Wall Street

While you were sleeping: Fed’s Bullard scares Wall Street

June 27 (BusinessDesk) – Wall Street slid after a US Federal Reserve official fuelled concern that the central bank might raise interest rates sooner than anticipated.

In an interview with Fox Business Network, St Louis Fed President James Bullard said the US economy is doing much better than most realise. While admitting the larger-than-expected contraction in first-quarter gross domestic product gave him “heartburn”, Bullard also suggested it was not indicative of the economic outlook.

“It looks like the first quarter was an aberration,” Bullard said. "You are basically going to be near normal on both dimensions basically later this year. That's shocking, and I don't think markets, and I'm not sure policymakers, have really digested that that's where we are."

Bullard predicts the central bank will lift its benchmark rate by the end of in the first quarter of 2015.

“The [Federal Open Market] Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run,” according to a Fed statement earlier this month.

Bullard, who is not a voting member of the policy-setting FOMC this year, won’t vote again until 2016.

“This has been the great debate taking place in the market: When will the normalisation of policy begin?” Henk Potts, a strategist at Barclays Wealth & Investment Management in London, told Bloomberg News. “The Fed is starting to give clues about what the exit strategy will look like. What investors should really be focused on is not when the rate rise comes through, but the speed of further rate rises and how that’s going to play out.”

Meanwhile, a Commerce Department report showed weaker-than-expected US consumer spending, increasing 0.2 percent in May, after being steady in April.

But analysts, like Bullard, point to more recent signs that justify optimism about the outlook.

"We have evidence of consumer spending continuing at a very good pace in June. That limits my concerns," Anthony Karydakis, chief economic strategist at Miller Tabak in New York, told Reuters.

In a separate report, the Labor Department said new applications for state unemployment benefits fell 2,000 to a seasonally adjusted 312,000 for the week ended June 21.

In the final hour of trading in New York, the Dow Jones Industrial Average fell 0.12 percent, the Standard & Poor’s 500 Index declined 0.16 percent, while the Nasdaq Composite Index dropped 0.1 percent.

Declines in shares of Wal-Mart, last down 1 percent, and those of Microsoft, last down 0.9 percent, led the slide in the Dow.

Shares Bed Bath & Beyond sank, last down 7.3 percent, after the company offered an outlook that fell short of expectations.

In Europe, the Stoxx 600 Index finished the session marginally lower from the previous close at 341.86. CAC 40 fell 0.5 percent, while Germany’s DAX declined 0.6 percent. The UK’s FTSE 100 eked out a gain of just under 0.1 percent.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Trade & Retail: Chinese Disaster Spells Quiet Season For NZ Fireworks Sales

In August, two massive explosions at a warehouse at the port in the port of Tianjin, Northern China, killing more than a hundred people and devastating large areas of the city. In the wake of the disaster, Chinese authorities rushed to regulate the distribution of all dangerous goods... More>>



Oceans: NOAA Declares Third Ever Global Coral Bleaching Event

As record ocean temperatures cause widespread coral bleaching across Hawaii, NOAA scientists confirm the same stressful conditions are expanding to the Caribbean and may last into the new year, prompting the declaration of the third global coral bleaching event ever on record. More>>

Scoop Business: A Decade Of Government Pre-Seed Investment

More publicly-funded science is being commercialised after a decade of government ‘pre-see’d investment, according to an independent review. More>>


Solid Energy: Plan To Shut Unprofitable Huntly East Mine

Solid Energy, the state-owned coal miner in voluntary administration, plans to shut down its unprofitable Huntly East mine and lay off 65 staff after deciding the site stands "no chance whatsoever" of finding a buyer. More>>


E Tū: Merger Creates NZ's Biggest Private Sector Union

E tū has been created by the merger of the Engineering, Printing and Manufacturing Union and Service and Food Workers’ Union. It represents more than 50,000 working New Zealanders in industries as diverse as aviation, construction, journalism, food manufacturing, mining and cleaning. More>>


Internet: NZ Govt Lifts Target Speeds For Rural Broadband

The government has lifted its expectations on faster broadband speeds for rural New Zealand as it targets increased spending on research and development in the country's information and communications technology sector, which it sees as a key driver for export growth. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news