Tag Archives: Central Bank

Federal Reserve chair Jerome Powell said “The time has come for policy to adjust”

Federal-Reserve-chair-Jerome-Powell

Important Takeaways:

  • Federal Reserve chair Jerome Powell said Friday that the central bank is poised to cut interest rates, adding that policymakers do not want to see the job market cool any further.
  • In a much-anticipated speech in Jackson Hole, Wyoming, Powell said the Fed’s fight to reduce inflation has largely succeeded and it now is attuned to risks of a faltering job market — setting up a rate cut in mid-September.
  • The unemployment has now risen to 4.3%, up nearly a percentage point from recent lows, raising alarm bells about a weakening economy.
  • “We do not seek or welcome further cooling in labor market conditions,” he said, in a notable contrast with his tone over much of the last two years, when he described a cooling in the job market as needed in order to bring the economy into better balance.
  • Between the lines: “We will do everything we can to support a strong labor market as we make further progress toward price stability,” Powell said, suggesting the recent worsening of the job market — the unemployment rate has risen from 3.7% in January to 4.3% in July — has the Fed’s attention.

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Central bank mulling over when to do something it hasn’t done since the darkest days of the pandemic: cut interest rates

CNN News screenshot

Important Takeaways:

  • For the past year, the Fed has kept interest rates at their highest level in more than two decades, making it more expensive to get a mortgage, borrow money and pay off debt.
  • “A rate cut could be on the table in the September meeting,” Fed Chair Jerome Powell said on Wednesday, immediately jolting markets.
  • But some of that luster faded later in his press conference as he repeatedly told reporters that a September cut is by no means a sure shot.
  • And if you’re thinking the Fed surely won’t begin cutting in November because of the election, you might want to reconsider.
  • The Fed, Powell said, will act in the best interest of the American economy regardless of the timing. “We don’t change anything in our approach to address other factors like the political calendar,” he said.

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One hundred Nations push for Digital Currencies and twelve Central Banks already have pilot programs

Federal-Reserve-statue

Important Takeaways:

  • Trending Toward A Cashless Society: One Hundred Nations Now Exploring Central Bank Digital Currencies
  • The Bible tells us that when the antichrist comes on the scene, he’s going to gain a foothold of global power. The beginning strategy of his power grab will be to first gain control over the world economy. It’s a lot faster and easier to gain economic control with all the means that are available today than it is to achieve military and political power. Once you have that economic control, you control people’s lives, and you can then take them over politically and militarily as well.
  • Recently, a new entity was created called the FedNow Service. The FedNow Service is a portal created by the Federal Reserve, which permits financial institutions to exchange funds digitally in real-time.
  • CoinDesk published an article recently that reads, “Federal Reserve’s ‘FedNow’ Launch Triggers Fresh Speculation Over Digital Dollar,” subheading, “While FedNow is currently not tied to any initiative for a digital U.S. dollar or the crypto space in general, experts warn that the system might end up as a precursor to the infrastructure for a central bank digital currency.”
  • Dave Weisberger, CEO and co-founder of CoinRoutes, said this: “If FedNow does indeed become a programmable CBDC, then it could theoretically be used to block payments for items the government doesn’t favor or to cut out people from the financial system who are seen as threatening in some way to governing authorities, aka, political opponents.”
  • On March 9th, 2022, President Biden signed an executive order that put into motion the machinery and the mechanism to develop a CBDC. In preparation for the G20 Summit, the Bank of International Settlements published a report laying out the Central Bank’s efforts to prepare for a CBDC and all its benefits.
  • At the same time that FedNow was emerging, the World Economic Forum (WEF) published principles of central bank digital currency interoperability.
  • One hundred nations are now exploring CBDC. Twelve central banks have pilot programs for digital currencies, and the EU already has a “digital euro.”
  • The problem with CBDCs is that they are programmable, traceable, expirable, and controllable by the government. For example, if a person goes to a gas station and they have a central bank digital currency, it can be determined how much money they are allowed to spend on gasoline. That’s how they will control the environmental agenda that we see taking place.
  • The trend toward a cashless society, they say, is inexorable. All of this is a striking foreshadowing of what we read in Revelation 13. It’s just another flashing light that the coming of Christ is near.

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Fed raises interest rates, signals more hikes ahead

A screen displays the headlines that the U.S. Federal Reserve raised interest rates as a trader works at a post on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 19, 2018. REUTERS/Brendan McDermid

By Ann Saphir and Howard Schneider

WASHINGTON (Reuters) – After weeks of market volatility and calls by President Donald Trump for the Federal Reserve to stop raising interest rates, the U.S. central bank instead did it again, and stuck by a plan to keep withdrawing support from an economy it views as strong.

U.S. stocks and bond yields fell hard. With the Fed signaling “some further gradual” rate hikes and no break from cutting its massive bond portfolio, traders fretted that policymakers could choke off economic growth.

“Maybe they have already committed their policy error,” said Fritz Folts, chief investment strategist at 3Edge Asset Management. “We would be in the camp that they have already raised rates too much.”

Interest rate futures show traders are currently betting the Fed won’t raise rates at all next year.

Wednesday’s rate increase, the fourth of the year, pushed the central bank’s key overnight lending rate to a range of 2.25 percent to 2.50 percent.

In a news conference after the release of the policy statement, Fed Chairman Jerome Powell said the central bank would continue trimming its balance sheet by $50 billion each month, and left open the possibility that continued strong data could force it to raise rates to the point where they start to brake the economy’s momentum.

Powell did bow to what he called recent “softening” in global growth, tighter financial conditions, and expectations the U.S. economy will slow next year, and said that with inflation expected to remain a touch below the Fed’s 2 percent target next year, policymakers can be “patient.”

Fresh economic forecasts showed officials at the median now see only two more rate hikes next year compared to the three projected in September.

But another message was clear in the statement issued after the Fed’s last policy meeting of the year as well as in Powell’s comments: The U.S. economy continues to perform well and no longer needs the Fed’s support either through lower-than-normal interest rates or by maintaining of a massive balance sheet.

“Policy does not need to be accommodative,” he said.

In its statement, the Fed said risks to the economy were “roughly balanced” but that it would “continue to monitor global economic and financial developments and assess their implications for the economic outlook.”

The Fed also made a widely expected technical adjustment, raising the rate it pays on banks’ excess reserves by just 20 basis points to give it better control over the policy rate and keep it within the targeted range.

Federal Reserve Board Chairman Jerome Powell arrives at his news conference after a Federal Open Market Committee meeting in Washington, U.S., December 19, 2018. REUTERS/Yuri Gripas

Federal Reserve Board Chairman Jerome Powell arrives at his news conference after a Federal Open Market Committee meeting in Washington, U.S., December 19, 2018. REUTERS/Yuri Gripas

CHOPPY WATERS

The decision to raise borrowing costs again is likely to anger Trump, who has repeatedly attacked the central bank’s tightening this year as damaging to the economy.

The Fed has been raising rates to reduce the boost that monetary policy gives to the economy, which is growing faster than what central bank policymakers view as a sustainable rate.

There are worries, however, that the economy could enter choppy waters next year as the fiscal boost from the Trump administration’s spending and $1.5 trillion tax cut package fades and the global economy slows.

“I think that markets were looking for more in terms of the pause,” said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia.

“It’s not as dovish as expected, but I do believe the Fed will ultimately back off even further as we move into the new year.”

The benchmark S&P 500 index <.SPX> tumbled to a 15-month low, extending a streak of volatility that has dogged the market since late September. The index is down nearly 15 percent from its record high.

Benchmark 10-year Treasury yields fell as low as 2.75 percent, the lowest since April 4.

ECONOMIC PROJECTIONS

Fed policymakers’ median forecast puts the federal funds rate at 3.1 percent at the end of 2020 and 2021, according to the projections.

That would leave borrowing costs just above policymakers’ newly downgraded median view of a 2.8 percent neutral rate that neither brakes nor boosts a healthy economy, but still within the 2.5 percent to 3.5 percent range of Fed estimates for that rate.

Powell parried three questions about whether the Fed intended to restrict the economy with its rate policy, but gave little away.

“There would be circumstances in which it would be appropriate for us to go past neutral, and there would be circumstances in which it would be wholly inappropriate to do so.”

Gross domestic product is forecast to grow 2.3 percent next year and 2.0 percent in 2020, slightly weaker than the Fed previously anticipated. The unemployment rate, currently at a 49-year low of 3.7 percent, is expected to fall to 3.5 percent next year and rise slightly in 2020 and 2021.

Inflation, which hit the central bank’s 2 percent target this year, is expected to be 1.9 percent next year, a bit lower than the 2.0 percent forecast three months ago.

There were no dissents in the Fed’s policy decision.

(Reporting by Ann Saphir and Howard Schneider; Additional reporting by Lewis Krauskopf in New York; Editing by Paul Simao and Dan Burns)

Erdogan tells Turks to buy free-falling lira as Trump doubles metals tariffs

FILE PHOTO: A money changer counts Turkish lira banknotes at a currency exchange office in Istanbul, Turkey August 2, 2018. REUTERS/Murad Sezer/File Photo

By Behiye Selin Taner and Tuvan Gumrukcu

ISTANBUL/ANKARA (Reuters) – President Tayyip Erdogan told Turks on Friday to exchange their gold and dollars into lira, with the country’s currency in free fall after President Donald Trump turned the screws on Ankara by doubling tariffs on metals imports.

The lira has long been falling on worries about Erdogan’s influence over monetary policy and worsening relations with the United States. That turned into a rout on Friday, with the lira diving more than 18 percent at one point, the biggest one-day drop since Turkey’s 2001 financial crisis.

It has also lost more than 40 percent this year, hitting a new record low after Trump took steps to punish Turkey in a wide-ranging dispute.

Trump said he had authorized higher tariffs on imports from Turkey, imposing duties of 20 percent on aluminum and 50 percent on steel. The lira, he noted on Twitter, “slides rapidly downward against our very strong Dollar!”

“Our relations with Turkey are not good at this time!” he said in an early morning post.

Those duties are double the level that Trump imposed in March on steel and aluminum imports from a range of countries.

The White House said he had authorized the move under Section 232 of U.S. trade law, which allows for tariffs on national security grounds.

While Turkey and the United States are at odds over a host of issues, the most pressing disagreement has been over the detention of U.S. citizens in Turkey, notably Christian pastor Andrew Brunson who is on trial on terrorism charges. A delegation of Turkish officials held talks with counterparts in Washington this week but there was no breakthrough.

Waves from the crisis spread abroad, with investors selling off shares in European banks which have large exposure to the Turkish economy.

The lira sell-off has deepened concern particularly about whether over-indebted companies will be able to pay back loans taken out in euros and dollars after years of overseas borrowing to fund a construction boom under Erdogan.

Erdogan’s characteristic defiance in the face of the crisis has further unnerved investors. The president, who says a shadowy “interest rate lobby” and Western credit ratings agencies are attempting to bring down Turkey’s economy, appealed to Turks’ patriotism.

“If there is anyone who has dollars or gold under their pillows, they should go exchange it for lira at our banks. This is a national, domestic battle,” he told a crowd in the northeastern city of Bayburt. “This will be my people’s response to those who have waged an economic war against us.”

“The dollar cannot block our path. Don’t worry,” Erdogan assured the crowd.

“AMERICAN-MADE CRISIS”

Erdogan, elected in June to a new executive presidency, enjoys the support of many Turks even though food, rent, and fuel prices have all surged. “This crisis is created by America,” said Serap, a 23-year-old clerk at a clothes store in central Istanbul.

However, the Istanbul Chamber of Industry expressed its concern about the lira while some economists were less impressed by the government’s handling of the crisis.

“The basic reason the exchange rate has gone off the rails is that confidence in the management of the economy has disappeared both domestically and abroad,” said Seyfettin Gursel, a professor at Turkey’s Bahcesehir University.

“Confidence needs to be regained. It is obvious how it will be done: since the final decision-maker of all policies in the new regime is the president, the responsibility of regaining confidence is on his shoulders.”

Turkey’s sovereign dollar-denominated bonds tumbled with many issues trading at record lows. Hard currency debt issued by Turkish banks suffered similar falls.

Meanwhile, the cost of insuring exposure to Turkey’s sovereign debt through five-year credit defaults swaps has spiraled to the highest level since March 2009, topping levels seen for serial defaulter Greece, which has three bailouts in the last decade.

THE TWEET AND THE SWORD

New Finance Minister Berat Albayrak – Erdogan’s son-in-law – acknowledged that the central bank’s independence was critical for the economy, promising stronger budget discipline and a priority on structural reforms.

Presenting the government’s new economic model, he said the next steps of rebalancing would entail lowering the current account deficit and improving trust.

This did nothing to revive the currency. “The tweet is mightier than the Turkish sword,” Cristian Maggio, head of emerging markets strategy at TD Securities, said in a note to clients. “Albayrak’s plan was uninspiring at best.”

Erdogan, a self-described “enemy of interest rates”, wants cheap credit from banks to fuel growth, but investors fear the economy is overheating and could be set for a hard landing. His comments on interest rates — and his recent appointment of his son-in-law as finance minister — have heightened perceptions that the central bank is not independent.

The central bank raised interest rates to support the lira in an emergency move in May, but it did not tighten at its last meeting.

 

(Additional reporting by Karin Strohecker, Claire Milhench and Ritvik Carvalho, Lisa Lambert and Susan Heavey; Writing by Humeyra Pamuk and David Dolan; Editing by Dominic Evans, Catherine Evans and David Stamp)

Mexican leftist’s adviser seeks to calm nerves before vote

FILE PHOTO: Mexico's presidential front-runner Andres Manuel Lopez Obrador of the National Regeneration Movement (MORENA) addresses supporters in Oaxaca, Mexico June 16, 2018. REUTERS/Jorge Luis Plata

By Dave Graham

MEXICO CITY (Reuters) – Leading presidential candidate Andres Manuel Lopez Obrador would seek to increase investor confidence in Mexico to strengthen the peso and could hold auctions of oil rights, a top adviser said on Monday, striking a moderate tone days before the election.

Leftist Lopez Obrador is leading ahead of Sunday’s vote and Alfonso Romo, his top business adviser, told reporters a Lopez Obrador government will do everything it can – short of intervention – to help the peso.

Romo, Lopez Obrador’s nominee for chief of staff, said his government would seek to strengthen the rule of law and create business conditions that would give investors confidence in order to support the Mexican currency.

He echoed other advisers, saying Lopez Obrador would respect the independence of the central bank.

Mexico’s peso sank to a 1-1/2 year low this month, hit by a broad dollar rally, a deadlock in talks to rework the NAFTA trade deal and nervousness ahead of the election.

Lopez Obrador, 64, is an anti-system third-time presidential candidate who promises to clean up corruption. Some of his proposals, such as suspending oil auctions, have unnerved investors.

The former Mexico City mayor holds a commanding double-digit lead in all major opinion polls, although one survey on Monday showed his lead narrowing slightly, to 12 points.

Romo sought to calm any jitters on Monday, saying there could be more auctions of oil drilling rights as long as a review of contracts that have already been awarded to private companies showed no problems.

“We will revise them and everything good will remain,” he said, noting Lopez Obrador had taken the same message to investors in New York.

Romo said such a review should be finished quickly, ideally by October, during the transition period before Mexico’s next president takes office in December.

Romo said he felt “at ease” with what he had reviewed so far regarding the landmark energy opening under current President Enrique Pena Nieto.

(Reporting by Dave Graham; Writing by Michael O’Boyle; Editing by Frank Jack Daniel and Dan Grebler)

Erdogan’s policies driving Turkey to the edge, challenger says

FILE PHOTO: The President of Turkey, Recep Tayyip Erdogan, speaks at Chatham House in central London, Britain May 14, 2018. REUTERS/Henry Nicholls/File Photo

By Dominic Evans and Birsen Altayli

ISTANBUL (Reuters) – President Tayyip Erdogan is driving Turkey “to the cliff” through ideological politics and a determination to control the central bank, the main opposition party’s presidential candidate said on Wednesday as the lira hit new record lows.

Muharrem Ince, who seeks to end Erdogan’s 15-year hold on power in next month’s elections, said the central bank and other economic institutions must be able to operate independently.

Erdogan said this week he plans to take greater control of the economy after the June 24 presidential and parliamentary polls, comments which drove the lira to fresh record lows. It is down 15 percent against the dollar this year.

“He’s taking the country to the cliff. The central bank needs to be independent, and the other economic bodies need to be autonomous. The rules need to operate,” Ince told Reuters in an interview.

The victor in next month’s election, held under a state of emergency imposed after a failed coup in 2016, will exercise sweeping new executive powers after Turks narrowly approved a constitutional overhaul in a referendum last year. The changes come into effect after the June vote.

Polls show Erdogan is comfortably the strongest candidate, though he could face a challenge if the presidential vote goes to a second round in July and his opponents rally around the other remaining candidate.

Ince, 54, a combative parliamentarian and former physics teacher, has energized his secularist opposition Republican People’s Party (CHP) since he started campaigning and may emerge as the leading opposition candidate – although he faces competition from former interior minister Meral Aksener.

Aksener’s nationalist Iyi (Good) Party and the CHP have joined with two other smaller parties in an opposition alliance for the parliamentary election. She and Ince are competing separately in the presidential vote.

“WIND OF CHANGE”

Ince said the president was driven by “ideological obsessions” and pushing Turkey in the wrong direction.

Erdogan, a self-described “enemy of interest rates”, wants lower borrowing costs to boost credit and new construction, and has said the central bank will not be able to ignore the president’s wishes. That has fueled concerns about the bank’s ability to fight double-digit inflation.

Since his Islamist-rooted AK Party swept to power in 2002, Erdogan has dominated Turkish politics. His power is reinforced by a near-monopoly of broadcast media coverage. Most TV channels show nearly all his campaign rallies, but rarely offer a platform to his opponents.

“The state of the media is heartbreaking. They have surrendered, they have kneeled,” Ince said, adding he had told broadcasters that unless they started to cover his speeches, he would hold a rally directly outside their offices to shame them.

If elected, Ince pledged to reverse some of the powers granted to the new presidency, saying it handed total control of the budget, judiciary and executive to one person.

Several European Union countries have expressed alarm that those changes are pushing Turkey deeper into authoritarian rule. Turkey is still a candidate for EU membership, though negotiations have stalled over rights concerns and other issues.

Erdogan says the increased powers are necessary to tackle security threats following the failed coup and conflict on Turkey’s southern borders with Syria and Iraq.

“No mortal should be given such authority,” Ince said. “It shouldn’t be given to me either.”

Against Erdogan, a skilled campaigner, the CHP has struggled to win support beyond its core base of secular-minded voters. In the last parliamentary election in November 2015 it took 25.3 percent of the vote.

Ince has pledged to be a non-partisan leader if elected, styling himself as “everyone’s president” and promising not to live in the 1,000-room palace built by Erdogan in Ankara.

“I see that a wind of change is blowing,” he said, pointing to what he described as a new atmosphere at his political rallies compared to last year’s referendum campaign.

“The momentum I have garnered is very different – there is a strong wind and people feel excitement,” he said.

(Additional reporting by Ali Kucukgocmen and Gulsen Solaker in Ankara; Editing by David Dolan and Gareth Jones)

Turkey’s lira hammered after Erdogan says wants greater economic control

By Daren Butler and Nevzat Devranoglu

ISTANBUL (Reuters) – Investors hammered Turkey’s lira on Tuesday, sending it to a record low after President Tayyip Erdogan said he plans to take greater control of the economy after next month’s election, deepening concerns about his influence on monetary policy.

Erdogan’s comments, in an interview with Bloomberg Television in London, reinforced long-standing worries about the central bank’s ability to fight double-digit inflation amid the president’s drive for lower interest rates.

He said the central bank, while independent, would not be able to ignore signals from the new executive presidency that comes into effect after the June polls. A self-described “enemy of interest rates”, Erdogan wants borrowing costs lowered to fuel credit and new construction.

“I will take the responsibility as the indisputable head of the executive in respect of the steps to be taken and decisions on these issues,” he said in the interview broadcast on Tuesday.

Turkey has called snap presidential and parliamentary elections for June 24 and polls show Erdogan as the strongest candidate to win the presidential vote. Turks narrowly backed a switch to an executive presidency in a referendum last year. That change is due to go into effect after the vote.

Erdogan’s comments helped pushed the ailing lira  to a fresh record low of 4.4604 against the dollar, bringing its decline this year to more than 14 percent.

It clawed back some of its losses after one of his advisers, Cemil Ertem, said the central bank had the independence to use all the tools at its disposal.

Yields on 10-year government bonds briefly touched their highest since at least January 2010.

 

PRESIDENT RESPONSIBLE

“Centralization of power and interference in the monetary policy is a concern to us,” said Dietmar Hornung, an associate managing director and head of European Sovereigns at ratings agency Moody’s, at a conference in London.

However, Erdogan’s economic adviser Ertem said the reduction of rates was a general target, rather than a specific aim of the bank’s next rate-setting meeting on June 7 – comments likely designed to take some pain off the lira.

“President Erdogan’s emphasis is not directed towards June 7. What the president says is that interest rates should be reduced as a target,” he told Reuters.

Erdogan said citizens would ultimately hold the president responsible for any problems generated by monetary policy.

“They will hold the president accountable. Since they will ask the president about it, we have to give off the image of a president who is effective in monetary policies,” he said.

“This may make some uncomfortable. But we have to do it. Because it’s those who rule the state who are accountable to the citizens,” he said.

He also said Halkbank <HALKB.IS> executive Mehmet Hakan Atilla, who was found guilty by a U.S. court of helping Iran evade U.S. sanctions, was innocent and Turkey wanted his acquittal.

“If Hakan Atilla is going to be declared a criminal, that would be almost equivalent to declaring the Turkish Republic a criminal,” he said.

To view a graphic on Turkey inflation and central bank funding, click: https://reut.rs/2rhsMkh

(Additional reporting by Marc Jones in London; Writing by Daren Butler and David Dolan; Editing by Janet Lawrence)

Dollar adds to gains as Fed’s Powell nods to ‘gradual’ rate hikes

FILE PHOTO: A security guard walks past a montage of U.S. $100 dollar bills outside a currency exchange bureau in Kenya's capital Nairobi, July 23, 2015. REUTERS/Thomas Mukoya/File Photo

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The dollar added to gains against a basket of major currencies on Tuesday after Federal Reserve Chairman Jerome Powell told U.S. lawmakers the central bank would stick with gradual interest rate increases despite the added stimulus of tax cuts and government spending.

Powell pledged to “strike a balance” between the risk of an overheating economy and the need to keep growth on track. His congressional testimony was his first public appearance since being sworn in as chairman earlier this month.

Powell is scheduled to present his remarks to a U.S. House of Representatives committee at a hearing scheduled for 10 a.m. EST (1500 GMT), followed by questions from lawmakers.

Brad Bechtel, managing director FX at Jefferies, in New York, said Powell’s comments were generally positive for the dollar.

“He is hawkish in the context of being very upbeat on the economy but willing to go at a moderate pace to normalize policy,” Bechtel said.

The dollar index, which measures the greenback against a basket of six other major currencies, was up 0.26 percent at 90.089.

Some of the headwinds the U.S. economy faced in previous years have turned into tailwinds, Powell said, noting recent fiscal policy shifts and the global economic recovery.

“That’s sort of a big statement if you think about it,” said Bechtel.

“He’s kind of dialed it up just a notch from where (Powell’s predecessor, Janet) Yellen was,” Bechtel said.

The Fed is expected to approve its first rate increase of 2018 at its next policy meeting in March, when it will also provide fresh economic projections and Powell will hold his first news conference. Fed policymakers anticipate three rate increases this year.

“From a 10,000-foot view, Powell’s prepared remarks are common-sense,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.

“It’s more interesting to see that the market is interpreting the comments as somewhat hawkish, and that’s more informative about the trading bias right now than about the Fed’s actually likely policy path.”

The dollar was up 0.19 percent against the Japanese yen at 107.11 yen.

The euro was down 0.26 percent against the dollar at 1.2284.

Italians vote in a national election on Sunday, while the leading political parties in Germany will decide on a coalition deal that could secure Angela Merkel a fourth term as chancellor.

There was not a whole lot of fear in the market about the outcome of the Italian election, Bechtel said.

“There is a lot of folks looking at hedges but not a huge amount of activity in that space. Kind of an ambivalence toward the election this weekend, which is interesting,” said Bechtel.

(Reporting by Saqib Iqbal Ahmed; Editing by Jonathan Oatis)

Wall Street kicks off 2018 on a strong note

The trading floor is seen on the final day of trading for the year at the New York Stock Exchange (NYSE) in Manhattan, New York, U.S., December 29, 2017

By Sruthi Shankar

(Reuters) – Wall Street’s main indexes were higher on Tuesday, the first trading day of the year, buoyed by gains in technology and consumer discretionary stocks.

Major stock indexes closed out 2017 with their best performance since 2013, powered by a combination of strong economic growth, solid corporate earnings, low interest rates and hopes of corporate tax cuts.

“The first week of trading usually suggests the overall trend of the markets which we expect to be positive,” Peter Cardillo, chief market economist at First Standard Financial in New York, wrote in a note.

Oil prices hovered near their mid-2015 highs on Tuesday amid large anti-government rallies in major exporter Iran and ongoing supply cuts led by OPEC and Russia.

Gold and copper prices continued their upward march, but the greenback began the year on the back foot, with the dollar index slipping to its weakest level since September.

“While we don’t expect the Iranian unrest to reach a full blown political situation just yet, the protest will add to an already positive uptrend in oil and gold prices,” Cardillo said.

December payrolls report, data on manufacturing and service sectors are among leading indicators expected during the week, and will be scrutinized for signs of improving economic health and the number of interest rate hikes this year.

Minutes from the Federal Reserve’s December meeting, when the central bank raised rates for the fourth time since the 2008 financial crisis, will be issued on Wednesday.

At 9:34 a.m. ET (1434 GMT), the Dow Jones Industrial Average was up 112.06 points, or 0.45 percent, at 24,831.28 and the S&P 500 was up 9.49 points, or 0.35 percent, at 2,683.1. The Nasdaq Composite was up 21.51 points, or 0.31 percent, at 6,924.90.

Six of the 11 major S&P sectors were higher, led by gains in technology and consumer discretionary stocks.

Shares of Walt Disney rose 1.6 percent, giving the biggest boost to the Dow, after brokerage Macquire upgraded the company’s stock to “outperform”.

Netflix and Discovery Communications also rose on positive recommendations from Macquire.

Shares of casino operators Wynn resorts, Las Vegas Sands and Melco Resorts Entertainment were down after a report showed lower-than-expected rise in Macau gambling revenue in December.

Abbott Labs jumped 2.6 percent after JPMorgan and Morgan Stanley upgraded the healthcare company’s stock to “overweight”.

Advancing issues outnumbered decliners on the NYSE by 1,938 to 652. On the Nasdaq, 1,678 issues rose and 743 fell.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)