US markets are poised to enter another volatile week of trading, with the Federal Reserve set to make its interest rate decision and reveal updated economic projections as President Donald Trump's tariffs continue to cloud the future of the world's largest economy.
Last week's remarkable row between Mr Trump and trading partners featured a dizzying set of tariff implementations, retaliations, threats and reversals that thrust markets into further turmoil.
“Right now, nothing seems to matter except what's going on in [Washington] DC and the confusing set of tariff news that seems to be released almost several times a day,” said Peter Andersen, founder of Andersen Capital Management.
The Dow Jones is down almost 3 per cent this year. The Nasdaq entered correction after falling more than 10 per cent from its recent record high. The S&P 500 briefly slid into correction territory on Thursday. In another sign of market volatility, the price of gold climbed above $3,000 for the first time on Friday.
“I think, investors don't have a grounding and they don't know what the endgame is,” Mr Andersen said. "I think, most investors are punch-drunk."
Policy uncertainty has seeped into the economic outlook. And with the Fed likely to hold rates steady on Wednesday, the economic impact of tariffs will face further scrutiny.
“The key question at this [Fed] meeting is how policymakers will balance the continuing unease about the frustratingly slow pace of disinflation progress with mounting concerns over the growth outlook, the usual uncertainties about the outlook compounded by a highly unusual degree of policy uncertainty,” Derek Tang, economist at the LH Meyer firm, said in a note to clients.
Fed officials have already signalled they are firmly in wait-and-see mode, meaning they are set to hold their target range for interest rates steady for a second straight time at 4.25 per cent to 4.50 per cent.
“We do not need to be in a hurry and are well positioned to wait for greater clarity,” Fed Chairman Jerome Powell said in his final public remarks before the central bank's quiet period.
With a pause likely, focus will instead turn towards Mr Powell's press conference and the Fed's economic projections. The Fed updates its forecasts on GDP, interest rates, inflation and unemployment every three months.
“The sheer amount of uncertainty around trade policy and fiscal policy is just suffocating for the economy, and there's no end in sight, so the Fed is going to likely factor that into their forecasts,” said Ryan Sweet, chief US economist at Oxford Economics.
Currently, Fed officials are trying to assess if the inflationary effects will be a one-time bump that they can look through. “My baseline view is that any imposition of tariffs will only modestly increase prices and in a non-persistent manner,” Fed Governor Christopher Waller said last month.
In separate remarks, New York Fed Governor John Williams anticipated that tariffs will have some inflationary effect this year.
Meanwhile, Mr Powell has asserted the economy remains in a “good place” despite the elevated uncertainty surrounding it. But as markets remain jittery over the effects of Mr Trump’s tariff approach, traders will look towards the even-keeled Fed Chairman to offer guidance on the economic outlook.
“He's got to pull this off where he signals that we're keeping an eye on the economy,” Mr Sweet said. "Things are holding up so far, but at the same time, saying that we're not going to ignore the inflation risk. He’s going to have to pull this one out of his hat and kind of get this one perfect, or you're going to see markets respond.”
Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital
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Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
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Transmission: 8-speed auto
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Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
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Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
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GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
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- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
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Name: Kumulus Water
Started: 2021
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Sector: Water technology
Number of staff: 22
Investment raised: $4 million
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The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
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UK's plans to cut net migration
Under the UK government’s proposals, migrants will have to spend 10 years in the UK before being able to apply for citizenship.
Skilled worker visas will require a university degree, and there will be tighter restrictions on recruitment for jobs with skills shortages.
But what are described as "high-contributing" individuals such as doctors and nurses could be fast-tracked through the system.
Language requirements will be increased for all immigration routes to ensure a higher level of English.
Rules will also be laid out for adult dependants, meaning they will have to demonstrate a basic understanding of the language.
The plans also call for stricter tests for colleges and universities offering places to foreign students and a reduction in the time graduates can remain in the UK after their studies from two years to 18 months.
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2019 ASIA CUP POTS
Pot 1
UAE, Iran, Australia, Japan, South Korea, Saudi Arabia
Pot 2
China, Syria, Uzbekistan, Iraq, Qatar, Thailand
Pot 3
Kyrgyzstan, Lebanon, Palestine, Oman, India, Vietnam
Pot 4
North Korea, Philippines, Bahrain, Jordan, Yemen, Turkmenistan
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From Europe to the Middle East, economic success brings wealth - and lifestyle diseases
A rise in obesity figures and the need for more public spending is a familiar trend in the developing world as western lifestyles are adopted.
One in five deaths around the world is now caused by bad diet, with obesity the fastest growing global risk. A high body mass index is also the top cause of metabolic diseases relating to death and disability in Kuwait, Qatar and Oman – and second on the list in Bahrain.
In Britain, heart disease, lung cancer and Alzheimer’s remain among the leading causes of death, and people there are spending more time suffering from health problems.
The UK is expected to spend $421.4 billion on healthcare by 2040, up from $239.3 billion in 2014.
And development assistance for health is talking about the financial aid given to governments to support social, environmental development of developing countries.
The biog
Name: Sari Al Zubaidi
Occupation: co-founder of Cafe di Rosati
Age: 42
Marital status: single
Favourite drink: drip coffee V60
Favourite destination: Bali, Indonesia
Favourite book: 100 Years of Solitude
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