Federal Reserve Chairman Jerome Powell gave a bullish outlook on the United States’ economy while downplaying the impact of global trade risks on the outlook for rate rises.

Global markets

Asian shares rose early on Wednesday, tracking a rise in global markets, as an upbeat assessment from the Fed buoyed stock markets around the world.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.16 percent and South Korea's market rose 0.85 percent.

Wall Street stocks rose on Tuesday, with the Dow Jones Industrial Average posting its fourth consecutive session of gains after Powell's optimistic analysis of the U.S. economy.

The Dow Jones Industrial Average rose 55.53 points, or 0.22 percent, to end at 25,119.89, the S&P 500 gained 11.12 points, or 0.40 percent, to 2,809.55 and the Nasdaq Composite added 49.40 points, or 0.63 percent, to 7,855.12.

“The outlook is consistent with two further quarter point rate increases this year, likely in September and December,” Barclays economist Michael Gaspen, told Reuters.

“The main risk is that individuals, business, and financial markets have underestimated the desire of Trump to re-orient trade flows and that further steps to implement tariffs will lead to a reduction in confidence, a slowdown in hiring, and a correction in equity markets,” he added.

Middle East markets

Most markets in the Middle East retreated on Tuesday as oil prices and global markets fell. Bahrain and Qatar’s stock markets added gains.

Saudi Arabia’s index dropped 0.3 percent as Saudi Kayan Petrochemical Co fell 1.2 percent and Saudi Basic Industries Corp (SABIC) lost 0.5 percent.

Riyad Bank, Saudi Arabia's fourth-largest lender by assets, shed 0.8 percent despite reporting earlier a 25.2 percent rise in second-quarter net profit, in line with analysts' forecasts.

Dubai’s index edged down 0.2 percent as Drake and Scull International (DSI) jumped 2.9 percent after it said on Monday that Tabarak Investment, which has a 13.3 percent stake in the company, will continue to be a strategic investor.

Emaar Properties lost 1 percent after it said it is exploring various financing options to streamline its business. That came in response to a Financial Times article, which said the Dubai developer has put $1.4 billion in assets on sale amid a slump in the real estate market.

Neighbouring Abu Dhabi’s index dropped 0.2 percent.

In Bahrain, the index was up 0.5 percent as Ahli United Bank climbed 2.3 percent, after Kuwait’s largest Islamic bank, Kuwait Finance House, said it was interested in a merger with Ahli United. KFH’s shares dropped 1.9 percent.

The Qatari index closed 0.1 percent up, lifted by gains in some banks such as Masraf Al Rayan, which added 1.3 percent. The bank announced a profit of 1.07 billion riyals ($293.96 million) on Monday, up 4.5 percent year-on-year.

Egypt’s index dropped 1.5 percent, while Oman’s index dropped 0.1 percent and Kuwait’s index lost 0.8 percent.

Oil prices

Oil prices retreated early on Wednesday, as the American Petroleum Institute reported late on Tuesday that U.S. crude stockpiles rose more than 600,000 barrels.

Brent futures were down 40 cents, or 0.6 percent, at $71.76 a barrel by 0027 GMT. They rose 32 cents to $72.16 a barrel on Tuesday, after earlier touching a three-month low.

U.S. West Texas Intermediate crude was down 27 cents, or 0.4 percent, at $67.82. It settled up 2 cents at $68.08 a barrel the session before, coming off a nearly one-month low.

Currencies

The dollar was trading higher on Wednesday following the Fed’s statement.

The dollar index against a basket of six major currencies edged up 0.1 percent to 95.051 after rising roughly 0.5 percent the previous day.

The dollar was up 0.05 percent at 112.97 yen after going as high as 113.08, its strongest since January 9.

Precious metals

Gold prices dropped more than 1 percent on Tuesday on a stronger dollar.

Spot gold was 1.1 percent lower at $1,226.91 per ounce by 1:36 p.m. EDT (1736 GMT), having earlier hit its lowest since last July at $1,225.58. The metal is down more than 5 percent for the year.

U.S. gold futures for August delivery settled down $12.40, or 1 percent, at $1,227.30 per ounce.

Gain a deeper understanding of financial markets through Thomson Reuters Eikon.

(Writing Gerard Aoun; Editing by Shane McGinley)
(gerard.aoun@thomsonreuters.com)

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