Equities wavered Wednesday following a down day on Wall Street, where worries about high valuations were compounded by mixed messaging from the Federal Reserve on its plans for interest rates.
Investors have enjoyed a months-long rally that has pushed some markets to record highs but the run-up took a pause Tuesday amid talk that the gains may have gone too far.
All three main indexes in New York were dragged down from peaks by tech titans including Nvidia and Amazon, which have been at the forefront of the global surge owing to huge bets on artificial intelligence.
Another key driver of the gains has been expectations that the Fed will cut borrowing costs several times this year, with last week’s reduction followed by forecasts that two more were in the pipeline.
However, comments from key officials stoked uncertainty among investors.
Boss Jerome Powell warned there was “no risk-free path”.
“If we ease too aggressively, we could leave the inflation job unfinished and need to reverse course later to fully restore two-percent inflation,” he said at an event in Rhode Island.
But he added: “If we maintain restrictive policy too long, the labour market could soften unnecessarily.”
The remarks came as Atlanta Fed chief Raphael Bostic and Chicago counterpart Austan Goolsbee warned of more inflation.
However, governor Michelle Bowman called on her colleagues to slash rates amid fears they were “at serious risk of already being behind the curve in addressing deteriorating labor market conditions”.
“Now that we have seen many months of deteriorating labour market conditions, it is time for the committee to act decisively and proactively to address decreasing labor market dynamism and emerging signs of fragility,” she said in prepared remarks ahead of an event in Kentucky.
Investors are now awaiting the release Friday of the personal consumption expenditure (PCE) index, the Fed’s favoured gauge of inflation, and key jobs figures the week after.
New governor Stephen Miran, who was appointed by Donald Trump, also called for more reductions.
Pepperstone’s Chris Weston wrote: “One assumes that if we see US core PCE inflation print at 0.2 percent month-on-month, followed by a tick higher in the layoff rate… and another weak non-farm payrolls release, Bowman may conclude the time for insurance cuts has passed and revert back to a 50-basis-point dissent.”
In Asian trade, Tokyo fell along with Sydney, Seoul, Singapore, Taipei and Wellington, though there were small gains in Hong Kong, Shanghai and Manila.
Tokyo – Nikkei 225: DOWN 0.4 percent at 45,300.30 (break)
Hong Kong – Hang Seng Index: UP 0.2 percent at 26,223.11
Shanghai – Composite: UP 0.3 percent at 3,832.38
Euro/dollar: DOWN at $1.1802 from $1.1816 on Tuesday
Pound/dollar: DOWN at $1.3514 from $1.3524
Dollar/yen: UP at 147.74 yen from 147.66 yen
Euro/pound: DOWN at 87.33 pence from 87.37 pence
West Texas Intermediate: UP 0.3 percent at $63.58 per barrel
Brent North Sea Crude: UP 0.2 percent at $67.08 per barrel
New York – Dow: DOWN 0.2 percent at 46,292.78 (close)
London – FTSE 100: FLAT at 9,223.32 (close)
