Surging COVID-19 cases in China hit the sentiment of investors
Wall Street stocks closed lower on Monday, erasing early gains as investors keep cautiously monitoring developments surrounding Ukraine. Russian and Ukrainian delegations held a fourth round of talks, but no progress was announced. Market participants are also looking ahead to the Federal Reserve’s next monetary policy decision due on Wednesday. The central bank is widely expected to raise rates by 25 basis points. The Dow Jones Industrial Average erased earlier gains to end little changed. The Nasdaq dropped 2%, and S&P 500 fell 0.74%.
Asian equity markets were down on Tuesday as geopolitical tensions coupled with surging COVID-19 cases in China hit the sentiment of investors. Led by weakness in Chinese stocks, MSCI’s broadest index of Asia-Pacific shares outside Japan fell nearly 2%. Adding to a cautious tone among investors, Washington has warned Beijing against providing military or financial help to Russia. Elsewhere, the Reserve Bank of Australia stated in the minutes that the war in Ukraine was a major new source of uncertainty.
Meanwhile, the dollar is losing some ground today, struggling to regain the bullish momentum as the Fed begins its two-day policy meeting. The greenback could derive support from the central bank’s decision to raise rates for the first time since 2018. The USD index was once again rejected from the 99.00 figure earlier in the day to settle around 98.70 in early European hours. Should the pressure persist in the short term, the buck may target the 98.50 next support zone. However, the bullish potential looks limited at this stage, and the buying pressure could reemerge after the Fed meeting outcome.