NEW YORK (Reuters) – The Australian dollar tumbled on Wednesday after the country’s central bank signaled a possible interest-rate cut in the latest indication that a global economic slowdown is tilting policymakers toward looser monetary policy, while a gauge of world equity markets edged off two-month highs.

Wall Street’s benchmark S&P 500 slipped amid concerns over growth, disappointing earnings reports and another possible U.S. government shutdown in the wake of President Donald Trump’s State of the Union address on Tuesday. European shares gained slightly.

Australia’s central bank was the latest to signal policy easing in the face of economic headwinds. Last week, the U.S. Federal Reserve said it would be patient on further rate hikes as Fed Chairman Jerome Powell said the case for rate increases had “weakened,” and the European Central Bank sounded less certain that it will start tightening policy later this year.

The about-face pushed the Australian dollar down 1.62 percent against the U.S. dollar, putting it on track for its biggest daily drop since November 2016. In turn, the U.S. dollar moved higher against a basket of major currencies.

“We are starting to see central banks follow Powell’s lead,” said Chris Gaffney, president of world markets at TIAA Bank in St. Louis. “That’s what’s actually contributed to this dollar rally that we have seen recently.”

The dollar index, which tracks the greenback against six major currencies, rose 0.32 percent. The euro was down 0.42 percent to $1.1364. The index was on pace for a fifth day of gains.

On Wall Street, the Dow Jones Industrial Average fell 21.22 points, or 0.08 percent, to 25,390.3, the S&P 500 lost 6.09 points, or 0.22 percent, to 2,731.61, and the Nasdaq Composite dropped 26.80 points, or 0.36 percent, to 7,375.28.

Shares of videogame makers Electronic Arts and Take-Two Interactive Software tumbled more than 10 percent after both companies gave disappointing forecasts.

Still, the S&P 500 has surged more than 16 percent since Dec. 24.

“After the big run-up that we have had, we are basically in more of a pause, digestion period, where we are seeing some churning but not a big overall move for the market,” said Keith Lerner, chief market strategist with SunTrust Advisory Services in Atlanta.

European stocks were buoyed by gains in Italian banks and tech stocks.

The pan-European STOXX 600 index rose 0.15 percent while MSCI’s gauge of stocks across the globe shed 0.28 percent.

Benchmark U.S. 10-year notes last rose 3/32 in price to yield 2.6946 percent, from 2.704 percent late on Tuesday.

Signs of strong U.S. demand for distillate products and tightening global crude supply boosted oil prices, but gains were capped by the rising U.S. dollar and ongoing concerns about a global economic slowdown.

U.S. crude settled up 0.7 percent at $54.01 a barrel, while Brent settled at $62.69 a barrel, up 1.2 percent.

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