The German economy grew by a stronger-than-expected 0.3% in the final quarter of last year
Wall Street stocks were mostly higher overnight, with most indexes coming off session lows following Powell’s comments. The Fed Chair helped to ease worries about a policy change by the central bank by saying that inflation is still soft while the economic outlook remains highly uncertain. As a reminder, inflation fears have risen in recent days and weeks against the backdrop of a sharp rise in bond yields. As such, the S&P 500 and the Dow Jones gained 0.13% and 0.05%, respectively, while the tech-heavy Nasdaq Composite shed 0.5% amid the ongoing sell-off in technology stocks.
Asian stocks came under severe selling pressure on Wednesday amid the lingering concerns about rising inflation that could prompt central banks to proceed to raising interest rates earlier than expected. As a result, Hong Kong’s Hang Seng lost nearly 3% and posted its biggest daily drop since May 2020 after the government announced to increase stamp duty on stock trades for the first time since 1993. Tokyo’s Nikkei 225 shed 1.61% and in Seoul, the Kospi edged 2.45% lower. In Australia, S&P/ASX 200 lost 0.90%, while the Shanghai Composite index gave up 1.99%.
European equities opened in a mixed manner amid signs of some improvement in risk sentiment following a sell-off seen in Asian markets. The pan-European Stoxx 600 hovered around the flatline in early trade. On the data front, Germany released its fourth-quarter GDP data. The economy grew by a stronger-than-expected 0.3% in the final quarter of last year. The Federal Statistics Office also revised upward its 2020 full-year GDP figure for the German economy to -4.9% from -5.0%.
Despite dovish comments from Powell and stronger-than-expected data out of Germany, EURUSD remains indecisive on Wednesday. The pair regained a bullish bias following yesterday’s decline but still lacks the upside momentum to challenge the 1.2200 barrier. On the downside, the 20-DMA continues to act as the key support just below the 1.2100 figure.