Economy

European stocks fall, bonds stronger after Fed flags weak United States inflation

European stocks fall, bonds stronger after Fed flags weak United States inflation

Minutes from the central bank's July meeting indicate, measures to scale down the Fed's balance sheet could be announced at its September policy meeting, with the roll-off to begin soon after.

The minutes said "some participants... argued against additional adjustments" until the Fed was sure that inflation was on track to meet its 2% target.

U.S. Treasury yields fell with benchmark yields retreating from one-week highs after the July meeting minutes and as investors anxious that a backlash against President Donald Trump's comments after a violent weekend rally would stunt his ability to deliver on his pro-business promises.

Federal Reserve economists were divided over how "transitory" recent weakness in U.S. inflation data was, according to minutes from their latest monetary policy meeting which cast doubt over the timing of the next rate hike.

According to Reuters, financial markets with depressed bond yields and record high stock indexes, as we are now seeing in the United States, give approximately a 40 percent chance of a rate hike before the end of the year.

The release interrupted another market session dominated by news relating to President Donald Trump, this time because he disbanded two business advisory councils after a growing number of corporate executives quit in response to his comments about the violence in Virginia last weekend. The dollar was down 0.45 percent against the yen, to 110.17 yen, and 0.7 percent lower against the Swiss franc, at 0.9659 franc. The greenback, however, rebounded on Thursday, with the ICE Dollar Index DXY, +0.45% up 0.3% to 93.841.

- The Stoxx Europe 600 index added 0.7 percent to 379.09, the highest in a week.

In June, Fed policymakers voted 8 to 1 to increase the rate by 0.25 percentage point, the third such increase in six months.

Agilent Technologies Inc. also reported profit above forecasts, sending shares 4.7% higher as one of the biggest percentage gainers among S&P 500 components.

Spot gold was up 0.2 per cent at $1,284.68 an ounce at 1345 GMT after rising 0.9pc the previous day.

Overnight, the dollar traded near three-week highs against a basket of global currencies on Wednesday, after recent economic data pointing to a strengthening US economy lifted expectations of a third rate hike later this year.

The Canadian dollar had gained more than 1 percent on Wednesday and last stood at C$1.2622 to the dollar, near its highest level in nearly two weeks.