The bank is expected to raise rates by 75 basis points to stem inflation
Wall Street stocks tried to shake of the recent slide and finished in positive territory overnight as US Treasury yields slumped from highs and the safe-haven dollar retreated from peaks. The Dow Jones Industrial Average gained 1.40%, the S&P 500 rose 1.83%, and the Nasdaq Composite ticked up 2.14% after a seven-day losing streak. In part, the rally was due to the fact that Fed’s Brainard noted the risks of going too far in policy tightening. Meanwhile, the so-called Beige book showed that economic activity was little changed in many regions across the US.
Asian markets advanced on Thursday amid a global rally, with MSCI’s broadest index of Asia-Pacific shares outside Japan adding 0.57%. Japan’s Nikkei 225 jumped 2.31%, South Korean Kospi gained 0.33%, while Australia’s S&P/ASX 200 gained 1.77%. Bucking the trend, Chinese stocks fell slightly as investors continued to digest worse-than-expected trade data released a day earlier. An extension of the lockdown in the city of Chengdu added to a more cautious tone among Chinese investors.
In Europe, equities saw a higher open on Thursday following a rebound on Wall Street. The European Central Bank is due to announce its latest monetary policy decision later today. The bank is expected to raise rates by 75 basis points to stem inflation. Market players will also be closely watching Powell’s speech due later in the day. US stock index futures point to a positive open in early pre-market deals.
The US dollar has settled below 110.00 after yesterday’s spike to fresh twenty-year highs around 110.80. The USD index derives support from the 109.50 zone so far, refraining from a deeper retreat despite overbought conditions. In a wider picture, the greenback has room to advance even higher due to rate differentials on the back of a hawkish Federal Reserve. However, in the immediate term, the buck could correct further should the ECB deliver a hawkish hike.
