Managing expectations

No surprises, then, from the Federal Reserve, which announced a 25bps cut for its federal funds, while leaving the door open to further easing. Officials had been talking up a weaker global backdrop, but the economic picture is benign and unlikely to change any time soon.

US markets were not impressed. All were down, led by the S&P 500 and the Nasdaq 100, which fell -01.09% and -1.30% respectively. Asian markets, also reacting to the unproductive US-China trade talks in Shanghai, followed suit, falling to six-week lows.

European markets presented a mixed picture, ahead of the release of the July manufacturing PMIs for Europe. The top performers on the FTSE 100 were the London Stock Exchange Group, up 6.25% on its Refinitiv deal, and Standard Chartered, on positive half-year results. The main laggards were Mondi and Royal Dutch Shell.

The dollar jumped to a two-year high against the euro and a two-month high against the yen, after the Fed dampened hopes for a series of interest rate cuts. The euro fell to $1.1045, while sterling fell 0.3% to $1.2125, or 7.1% over the past three months on no-deal Brexit fears. Brent crude fell 1.6% to $63.99, and US crude was down 1.6% at $57.65.

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