Cyan markets rose on Thursday after U.S. data provided new indicators that inflation was easing and Federal Reserve Chairman Jerome Powell eased concerns about the bank’s plans to cut interest rates this year. Rose.
A rally in stocks that began in late 2023 has stalled in recent weeks following a series of reports suggesting the economy is too strong and prices too sticky for officials to start easing monetary policy this year.
Warnings from decision-makers that they fear borrowing costs are being cut too quickly will also impact investors, with expectations of how much borrowing (if any) will take place by January. is moving backwards.
But those concerns were allayed some on Wednesday when Chairman Jerome Powell said he expected more cuts to be made this year.
He told a conference in California that interest rates at 20-year highs were doing their part, but that moving too soon could be “quite disruptive” to the world’s top economy. Ta.
However, if the economy continues to perform as expected, a majority of Fed participants still expect it would be appropriate to begin lowering policy rates at some point this year.
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“Powell said the recent data doesn’t change things significantly,” Evercore’s Krishna Guha said.
“We read this as confirmation that market fears that the economy is too strong for the Fed to cut rates in June are overblown, and our base case is that June and March of this year The rate cut will be limited to just 30%.”
Confidence among traders was further boosted by figures showing slower growth in the services sector and a sharp decline in input costs in March, suggesting inflation is easing.
This was in contrast to stronger-than-expected results for U.S. manufacturing and prices paid earlier this week, which raised questions about the Fed’s rate cut schedule.
Confidence was further boosted by a report that pointed to a further slowdown in inflation in the euro area.
On Wall Street, the S&P 500 and Nasdaq rose, and most of Asia followed suit.
Tokyo, Sydney, Seoul, Singapore and Jakarta were all in the black, while Manila and Wellington had small losses.
Hong Kong and Shanghai were closed for public holidays.
Traders are now awaiting the release of U.S. jobs data, scheduled for Friday, which could impact the Fed’s plans.
If the downside is significantly off, expectations for a June interest rate cut may increase, but if it exceeds expectations, there is a strong possibility that the market will sell.
After Powell’s remarks, gold hit a new record of $2,304.96 an ounce due to geopolitical concerns from the Middle East crisis and war in Ukraine, according to Bloomberg News.
Oil prices have also been hovering near five-month highs due to concerns over fighting between Israel and Hamas and warnings of Iranian retaliation over the Damascus consulate annex bombing that killed seven members of the Revolutionary Guards, including two generals. Ta. Tehran condemns Israel.
OPEC+’s call for member countries to maintain production cut strategies also helped push up prices.
