The stock market has reacted positively to dovish comments from the Federal Reserve and Tata Steel’s bid to sell its U.K. branch could set off a rash of mergers and consolidations in the European steel industry.
Yellen Stresses Caution
Janet Yellen, the Federal Reserve chairwoman, said on Tuesday that the U.S. economy remained on track despite a rough start to the year because of the drag from weak growth in other countries, although she noted that the drag was being offset by lower borrowing costs.
Yellen told the Economic Club of New York that the economy “had proven remarkably resilient,” and that the Fed expected better days ahead. She said the Fed still intended to pursue a careful, patient course toward higher interest rates as the economy improved, yet the cautious tone of her remarks, however, suggested no rate increase was likely at the Fed’s next meeting, in April.
More Consolidation for European Steel?
Tata Steel’s plan to sell its U.K. steelmaking business has raised expectations of a long-awaited consolidation in the European steel sector, which is suffering from years of unaddressed overcapacity.
Since the multibillion-euro takeovers of Europe’s Arcelor and Corus by Indian giants Mittal and Tata in 2006 and 2007, dealmaking in Europe’s steel industry has been all but paralyzed as cash-starved producers battled the global economic crisis and a slowdown in China that encouraged it to export cheap steel.