U.S. stocks erased previous losses and treasuries advanced after Federal Reserve Chairman Jerome Powell reiterated his commitment to curbing inflation during his testimony in Congress, reviving fears that the aggressive path rises in central bank interest rates could bring down the recessionary economy.
The S&P 500 and the high-tech Nasdaq 100 went up. Treasury yields declined with a 10-year yield hovering around 3.15 percent. The dollar fell after previous gains, while other safe haven assets such as gold rose.
The S&P 500 is poised for its worst first half since Richard Nixon’s presidency, as it evaporates optimism that policymakers can land a soft landing as they navigate an aggressive monetary hardening course to control inflation. Powell on Wednesday said the central bank will continue to raise interest rates to curb inflation, reiterating mostly its comments from last week. He made no reference to the size of future excursions during his testimony.
“Such an aggressive tightening will make a soft landing very difficult to imagine, and these fears of recession or at least significantly slower growth are affecting stock demand,” said Fiona Cincotta, senior financial market analyst at City Index. , in a note.
Mala Vintage | The S&P 500 index is forecast for its worst first half since 1970. The market continues to be skeptical about the outlook for risky assets. Deutsche Bank AG CEO Christian Sewing has joined a growing chorus of executives and policymakers who warn that the global economy could go into recession as central banks step up efforts to curb inflation .
West Texas Intermediate crude fell below US $ 103 a barrel, and prices fell alongside other commodities, including copper. Concerns about a broad economic slowdown are overshadowing the aftermath of the war in Ukraine and signs of a still tight supply.
President Joe Biden plans to call on Congress to enact a gas tax to cool the rise in pump prices and ease pressure on consumers.
In Europe, stocks fell on the first day of this week as miners and energy fell with commodity prices.
What to see this week:
- Fed Chairman Jerome Powell testified in the Senate every six months on Wednesday
- Powell’s testimony at the U.S. House on Thursday
- Initial unemployment claims in the US on Thursday
- PMI for Eurozone, France, Germany, UK, Australia, Thursday
- ECB Economic Bulletin, Thursday
- Consumer sentiment at the University of Michigan in the United States on Friday
- RBA’s Lowe speaks at the panel on Friday
Some of the main movements in the markets:
Stocks
- The S&P 500 was up 0.2% at 10:20 a.m. New York time
- The Nasdaq 100 was up 0.7%.
- The Dow Jones Industrial Average changed little
- The Stoxx Europe 600 fell 1.2 percent
- The MSCI World Index rose 1.9%.
Coins
- The Bloomberg Dollar Spot index fell 0.1%.
- The euro rose 0.2% to 1.0558 US
- The British pound fell 0.1% to 1.2264
- The Japanese yen rose 0.4% to $ 135.97
Good
- The yield on 10-year Treasury bonds fell 11 basis points to 3.16 percent.
- Germany’s 10-year yield fell 15 basis points to 1.62 percent
- The 10-year yield in the UK fell 19 basis points to 2.47 per cent
Goods
- West Texas Intermediate crude fell 6.4% to US $ 102.48 a barrel
- Gold futures rose 0.4% to 1,846 U.S. ounces