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US, global markets retreat after Powell’s hawkish rate stance – Daily Local

New York (AP) — Wall Street was turned to loss before the market opened on Friday. Global stocks fell after Federal Reserve Chair Jerome Powell showed that interest rates needed to be raised aggressively to combat inflation.

Dow Jones Industrial Average futures fell 0.3%, while S & P 500 futures fell 0.1%.

Shanghai rose after authorities promised to ease antivirus controls on truck drivers blocking food supply and trade, but most major global indices fell. Oil prices have fallen by more than $ 1 a barrel.

In a panel discussion held by the International Monetary Fund on Thursday, the Fed said the Fed needs to move faster than before to tackle high inflation. This suggests that interest rates are expected to rise sharply in the coming months.

The S & P 500 then turned around and fell 1.5% on Thursday, while the Dow Jones Industrial Average fell 1% and the Nasdaq fell 2.1%. The Russell 2000 Small Caps Index gave up 2.3%.

“Unfortunately, under the weight of war, global energy and food risk, the stock market can begin to buckle in a fairly spectacular way,” said Clifford Bennett, chief economist at ACY Securities. I am.

The Federal Reserve has already announced a quarter percent rate hike, and Wall Street expects a half percent rate hike at its next meeting two weeks later. Other central banks have also moved to raise interest rates to mitigate the impact of rising prices on businesses and consumers.

“There’s something in front-loading ideas,” Powell said as the Fed tackled inflation, which reached its 40-year high.

According to Powell, a halving rate hike could occur when Fed officials meet their next interest rate and economic policy meeting from May 3rd to 4th. In the past, the Fed has typically raised benchmark short-term interest rates in more modest quarterpoint increments.

Investors are also paying close attention to Ukraine’s developments and the French presidential election this weekend.

Germany’s DAX fell 1.2% on Friday noon trading, France’s CAC 40 fell 1.4%, and the UK’s FTSE 100 fell 0.4%.

In Asian trading, the Japanese benchmark Nikkei 225 fell 1.6% to close at 27,105.26. Australia’s S & P / ASX 200 was down 1.6% to 7,473.30. South Korea’s Kospi was down 0.9% to 2,704.71. Hong Kong’s Hang Seng Index fell 0.2% to 20,638.52, and Shanghai Composite regained its previous loss, rising 0.2% to 3,086.92.

Japan’s Treasury Minister Shunichi Suzuki made a comment after meeting with Treasury Secretary Janet Yellen, who was on the sidelines of the G20 Finance Ministers’ Meeting, as seen as a slight strong backlash against the “sudden movement” of the exchange rate.

The US dollar fell slightly from 128.36 yen to 128.30 yen. The euro was priced at $ 1.0822, down from $ 1.0840.

Recently, the dollar has skyrocketed against the yen and other currencies, widening the interest rate differential between Japan and other Asian countries, and it is unlikely that the rise in US interest rates will ease.

Stephen Innes of SPI Asset Management said there could be interventions, especially from the United States.

“The Bank of Japan is likely to stick to its approach to ultra-dubish monetary policy compared to its peers who implicitly welcome the depreciation of the yen,” Ines said, referring to Japan’s central bank. rice field.

In France, President Emmanuel Macron seems to have taken the lead over the far-right challenger Marine Le Pen, alleviating concerns about potential major changes in Europe. Supported by central left-wing leaders in Germany, Spain and Portugal, Macron, in a newspaper editorial for French voters, urged him to avoid the “far-right candidate” without mentioning Le Pen by name.

Bond yields are rising as investors prepare for higher interest rates. Yields on 10-year Treasury bonds were stable at 2.92% on Friday after staying close to the highest level since late 2018.

Benchmark US crude fell $ 1.07 to $ 102.72 a barrel. It rose 1.6% on Thursday and about 40% annually. It makes gasoline more expensive and it goes deep into the consumer’s wallet. Brent crude, the international standard, fell from $ 1.04 a barrel to $ 106.92.

US, global markets retreat after Powell’s hawkish rate stance – Daily Local

Source link US, global markets retreat after Powell’s hawkish rate stance – Daily Local

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