2 min to read
Observations of FRB interest rate hikes increase & fluctuation of the US stock market and USD
The US stock market revived ahead of the earnings season opening.
“Observations of FRB interest rate hikes increase & fluctuation of the US stock market and USD”
The US stock market revived ahead of the earnings season opening. Although the US stock market was closed for the Easter holiday last Friday, prices fluctuated significantly yesterday due to the fact that the market had been closed.
Following the robust results of the US non-farm payroll in March last week, both the S&P 500 and NASDAQ opened with significant losses due to caution over tightening by the Federal Reserve (FRB). However, sentiment improved quickly after the opening.
Small-cap and industrial stocks were supported by confidence in the US economy’s ability to overcome the banking crisis, while semiconductor stocks benefited greatly from Samsung’s decision to reduce semiconductor production.
Although tech stocks fell as a result of Apple’s sluggish shipment of Mac computers, there were also some rising stocks.
The S&P 500 recovered all losses to end up 0.1% higher.
However, the NASDAQ composite index ended trading unchanged.
As the first quarter begins this week and the bond market indicates recession risk, the market sentiment is positive.
Valuations are currently high, but although expectations may not be too high, the earnings-driven rally is still an unknown factor in terms of how much further it can rise.
Focus on tomorrow’s US CPI index announcement & FRB member statements
Tomorrow, the US CPI Consumer Price Index will be announced, which is expected to receive significant attention.
If it rises more than expected, it will further push up expectations for an interest rate hike by the FRB.
At the next meeting in May, more than 70% currently support a 0.25% interest rate hike, but expectations for a rate cut have decreased slightly.
Today, a speech by an FRB member is scheduled, and concerns remain about underestimating the impact of the banking crisis by emphasizing that the battle against inflation is not yet over.
USD outlook is chaotic due to the weak yen
Even if FRB members become hawkish, there remains doubt about how much the US dollar will rise as other central banks, such as the ECB and the Bank of England, may pause interest rate hikes.
The euro, pound, and Swiss franc are representing the best-performing major currencies this year.
The US dollar may rise against currencies where central banks are showing cautious attitudes, such as the Japanese yen and Australian dollar.
The Australian and Chinese central banks have suggested that they will take time to address inflation rates in order to temporarily return to their targets.
In his inauguration speech yesterday, BOJ Governor Ueda indicated that he had prepared options for policy normalization but did not suggest that they would be addressed urgently.
Visit XM Official Website.
