Stocks and commodities thrive after Federal Reserve Chairman Jerome Powell showed he was less hawkish than expected when he testified before Congress pointed out a move away from pandemic politics. Rising on relief, the dollar hit a six-week low. Bonds have remained stable after starting the year with a decline, though another test is due later in the day when U.S. inflation data is expected to rise wildly. MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 1% to a monthly high, led by his 3.5% rise in Hong Kong technology stocks.
The Nasdaq and S&P 500 posted their best sessions of 2022, up 1.4% and 0.9% respectively. S&P 500 futures held firm in early Asian trading. In the bond market, the benchmark 10-year Treasury yield remained steady at 1.7374%, retreating about 7 basis points (bps) from Monday’s nearly two-year high. Commodities also rose, with Brent crude futures on Wednesday rising 3.5% overnight, taking him above $84 a barrel for the first time in two months.
Powell said in a congressional hearing that the economy could cope with his COVID-19 surge and monetary tightening as his second term on the Federal Reserve Board (Fed) was confirmed. But he didn’t go into new details beyond what traders had already gleaned from last month’s Fed meeting minutes. “One of the key takeaways is that the urgency of tightening has clearly not increased since we last heard from Powell in December,” analysts at NatWest Markets wrote in a note.
Overnight US crude rose 3.8% and last week he rose 0.3% to $81.45 a barrel. Stakes in vaccine makers Moderna and Biontech have been put up for sale after the World Health Organization said more research was needed into vaccine efficacy against Omicron, prompting an alert. Chinese data show ex-factory price increases are slowing, possibly indicating that global price pressures may be easing. US inflation data will be released on Wednesday at 13:30 pm (GMT), with CPI expected to reach a nearly 40-year high of 7% year-on-year.
But Powell has already acknowledged the need to act soon to keep prices in check, and analysts say another surprise may be needed to push US yields or the dollar higher. thinking about. The dollar fell below its 200-day moving average line against a basket of currencies last night and fell further to his six-week low of 95.563 on Wednesday. $1.1367 at the bottom of the recent range against the euro. It has stabilized at 115.29 yen, but fell against Australia and the kiwi last night. “Prices already have a lot of hawkish news,” said Jane Foley, currency strategist at Rabobank.
- Tech drives the resurgence in stocks as Powell follows the plan
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