Stocks shrug off Fed's interest rate rise but await Trump's tariffs

Trump's trade tariffs against major exporters loom while Facebook tries to dampen data-breach controversy.

Following the US Federal Reserve’s decision to raise its interest rates, US stock-market indexes were trading modestly higher but markets now await US President Donald Trump’s decision on tariffs.

The Federal Reserve lifted its key interest rate 25 basis points from 1.5% to 1.75%, the highest level since 2008 and the sixth interest rate increase since the end of 2015.

As the new chairman, it was Jerome Powell's first major decision as head of the bank and appears to be largely expected by the market. Yet, analysts suspect it signals a more aggressive approach from the bank may be coming. Mr Powell is expected to give a speech later today.

The central bank also released its projections for the federal funds rate, which remained unchanged for 2018. However, it lifted its 2019 forecast to 2.9%, up from its 2.7% projection released in December.

The Dow Jones Industrial Average briefly traded 250 points higher than the previous session, before closing about 73 points higher at 24,737.17. The S&P lifted nearly 0.8% but ended the day barely changed at 2716. And, after a tough week of social network cyber-breach revelations concerning Facebook, Nasdaq stocks slipped only 0.2% to 7358.

Social woes
Facebook chief executive Mark Zuckerberg is launching the beginnings of a charm offensive in Washington as he finds it increasingly difficult to shed controversy over revelations that the social network's user data was accessed by analysis firm Cambridge Analytica.

The social network’s shares recovered somewhat with a 2.5% gain. Nearly $US50 million of the company’s market value has vaporised this week due to the cyber-security debacle.

The company is sending its staffers to brief a half dozen of Capitol Hill's most powerful committees this week, including the Intelligence, Commerce and Judiciary panels in both chambers. But a growing number of lawmakers want Mr Zuckerberg or chief operating officer Sheryl Sandberg to testify on the Hill instead.

Meanwhile, a collection of privacy organisations including EPIC (Electronic Privacy Information Centre) and the Centre for Digital Democracy are supporting the US Federal Trade Commission’s investigation of Facebook's potential violations of a 2011 agreement it made with the agency.

Under a 2011 consent decree with the FTC, Facebook agreed to get express permission and notify users before sharing their data with third parties. The social network could face hefty fines if the agency finds it violated the terms of the agreement.

Trump’s tariffs coming
President Donald Trump is now expected to announce his tariff plans, investment restrictions and other trade limits on March 23. They will largely be directed at China. The US hopes to eventually bring China to the table to talk about American concerns with Beijing's industrial overcapacity, state subsidies and lack of market access for US companies.

The administration’s 300-page report is part of its section 301 investigation into China's intellectual property and technology transfer policies will make recommendations on what China should do to curb those practices.

"There's a recognition that you have to punch a bully in the face. That's the best explanation of what's going on here," an administration official involved in the planning told media.

The US is expected to impose up to $US60 billion in tariffs against imports from China including a 25% tariff on steel and a 10% tariff on aluminium. Countries likely to be excluded from the new steel and aluminium import tariffs are Canada, Mexico, South Korea, the EU, Argentina and Brazil.

However, Japan is expected to be included, even though the Japanese trade minister recently said he thought Japan might be exempted from the tariffs.

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