World markets down as US Fed, central banks flag global risks

World markets slipped on Thursday as signals from the US Federal Reserve and a number of other top central banks that they remain in rate cut mode amid global uncertainty kept the bears on top.

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Trade war and actual war worries pushed Europe's main share indexes nearly 18 into the red early on, while the dollar and safe-haven government bonds both rose and gold scored its latest record high overnight.

There was little reaction as Switzerland cut its interest rates back towards zero. Sweden kept its borrowing costs steady, while the Bank of England was also expected to sit tight with its latest rate decision at 1200 GMT.

Wall Street futures were still pointing higher, just about.

The Fed on Wednesday had left US rates unchanged too but traders were pleased to see it maintain a projection for two quarter percentage-point rate cuts by year-end.

Policymakers did revise up their inflation forecast for the year and marked down their outlook for economic growth, citing risks from US President Donald Trump's tariff policies.

Still, investors took comfort from the Fed's “dot plot” and Chair Jerome Powell’s comments that tariff-driven inflation would be “transitory” and largely confined to this year.

“We think unemployment will be the ultimate arbiter,” PIMCO economist Tiffany Wilding said, predicting the Fed would “cut aggressively” if the jobless rates starts to move higher.

The prospect of further Fed easing this year saw gold scale yet another record high of $3,057.21.