Investors are now looking for Congress to approve President Joe Biden’s proposed economic aid plan
Wall Street stocks climbed to fresh all-time highs overnight after Powell said the Federal Reserve sees no sign inflation might rise out of control. The comments on inflation and maintaining ultra-loose monetary policy helped to ease fears that rising consumer prices might lead the central bank to raise interest rates sooner than later. After Powell‘s second day of testimony to legislators in Washington, the S&P 500 index added 1.14%, the Dow gained 1.35%, and the Nasdaq Composite picked up 1%.
Following suit, Asian stocks proceeded to recovery following a sell-off witnessed on Wednesday. The Shanghai Composite Index rose 0.5% and the Nikkei 225 in Tokyo gained 1.67%. The Hang Seng in Hong Kong advanced 1.75%. The Kospi in Seoul added 3.14% and Sydney’s S&P/ASX 200 was 0.83% higher. Now, investors are looking for Congress to approve President Joe Biden’s proposed economic aid plan.
In Europe, equities opened higher on Thursday, also cheering comments from Federal Reserve Chairman Jerome Powell on the inflation outlook. The pan-European Stoxx 600 gained 0.4% in early trade. However, higher bond yields could start to threaten the broader investor sentiment later today. Of note, a measured pullback in US stock futures could be seen already, suggesting the upbeat tone in the markets remains fragile.
Meanwhile, the dollar is actually tracking lower nearly across the board despite rising yields. As a result, EURUSD climbed to a six-week high of 1.2200 in recent trading, extending a bounce from the 20-DMA. Later in the day, the second revision of Q4 US GDP and initial claims could affect short-term dynamics in the pair. The common currency needs to confirm a break above 1.2200 on a daily closing basis. Otherwise, the prices could see another retreat, especially as US stock futures signaling the abating demand for risky assets.