Financial and Economic Brief - April 10, 2018by © Liberty Publishing, Inc.
Dow Volatility Continues
The new normal on Wall Street is about “wild fluctuations, mammoth moves and rapid-fire price reversals”. Three of the Dow's biggest daily point drops in its history have occurred this year. The roller coaster on the market has been powered by unsettling headlines: U.S. and China tariffs; Facebook’s data-privacy crisis; and worries about rising interest rates and inflation. In an attempt to soothe investors’ frayed nerves, Wall Street pros insist last year’s rally that pushed the Dow up 25% was the anomaly, and that the more violent price action this year is more normal market behavior.
Gradual Rate Hikes, Appropriate
Federal Reserve President Charles Evans, said that he is “optimistic” inflation will reach the Fed’s 2% goal and that slow, gradual rate increases will be appropriate. The Fed next meets to set policy in June, by which time the Fed will have more inflation data in hand. If it remains on track for 2%, “continuing our slow gradual increases will be appropriate to get us to the point where monetary policy isn't really providing more lift to the economy,” Evans said.
Russia’s Ruble Falls
Russia’s ruble experienced its biggest one-day fall for over two years on Monday and stocks in major Russian companies also slid, as investors reacted to a new round of U.S. sanctions. The sanctions target officials and business people around President Vladimir Putin in a response to alleged Russian meddling in the 2016 U.S. election. The impact of the new sanctions could threaten Russia’s economic recovery. Russia’s currency plunged 3.39% to its lowest level since November 2017. The sanctions mean Russian companies face the prospect of losing access to the U.S. market, which accounted for around 14% of Rusal’s revenue last year, according to analysts at Promsvyazbank.