Wall Street is poised for a mixed to lower opening on Friday, influenced by hawkish remarks from U.S. Federal Reserve Chair Jerome Powell, dispelling expectations of an imminent peak in interest rates. The dollar remains stable in the wake of Powell’s comments, impacting global markets. The MSCI world shares index hovers near a one-week low, set for a fourth consecutive session of losses and a weekly decline of approximately 0.5%. European stocks, including Germany’s DAX and France’s CAC 40, experienced declines, reflecting the subdued market sentiment. Powell’s uncertainty about the inflation battle and the potential for further policy tightening contributed to higher yields, overshadowing equities.
Global markets anticipate a mixed to lower opening on Friday as U.S. Federal Reserve Chair Jerome Powell’s hawkish comments dispel expectations of an imminent peak in interest rates. The impact is felt on Wall Street, where S&P 500 futures remain flat, and Nasdaq futures dip by 0.2% at 1210 GMT. The MSCI world shares index hovers near a one-week low, signaling a fourth consecutive session of losses and a weekly decline of around 0.5%. European stocks, including Germany’s DAX and France’s CAC 40, experience declines, reflecting subdued market sentiment amid Powell’s uncertainty about the inflation battle and potential policy tightening.
Powell’s remarks, coupled with a weak auction of $24 billion in 30-year Treasuries, contribute to higher yields, casting a shadow on equities and supporting the dollar. The decline in U.S. yields sparks questions about the effectiveness of monetary policy, with investors pondering the impact of spiraling deficits. Analysts suggest that this theme will be a key focus for investors in 2024 as the United States prepares for presidential elections.
While investors had anticipated signs of a U.S. interest rate peak following the Fed’s decision to hold rates steady last week, Powell’s recent hawkish stance has raised concerns. U.S. rate futures now indicate a 60% chance of a rate cut at the Fed’s June 2024 meeting, compared to 70% odds before Powell’s speech. Traders closely monitor interest rate volatility, with debates over the appropriateness of the current Fed funds rate contributing to market fluctuations.
Asian stocks close lower as concerns over the world’s second-largest economy resurface, prompted by data showing a dip in Chinese consumer prices. The pressure on Beijing to continue incremental easing in monetary and fiscal policy persists. The yield on 10-year Treasuries rises to 4.6142%, marking a 12 basis points gain, the largest one-day increase in three weeks.
In currency markets, the dollar index slightly declines from its overnight gains, standing at 105.85. Brent crude rises 95 cents to $80.96 a barrel, and U.S. crude increases 90 cents to $76.64 a barrel, both up close to 1% on the day. The oil market faces demand concerns, triggering a sell-off due to a fading war risk premium.
Spot gold dips about 0.5% to $1,947.60 per ounce, tracking for its worst week in over a month, down 1.8%, influenced by elevated yields and a stronger dollar. In cryptocurrencies, bitcoin and ether hold near multi-month highs, with renewed speculation over the potential approval of an exchange-traded bitcoin fund injecting fresh momentum into digital assets.
