Fed Chair warned that interest rates could still rise
US stocks fell on Thursday as the pressure from the bond market reemerged. Yields rose after the announcement of disappointing results of a sale of 30-year Treasury bonds. Meanwhile, Federal Reserve Chair Powell said the central bank will not hesitate to raise interest rates again if it feels that inflation isn’t under control. Rising yields couples with Powell’s hawkish comments pressured stocks across the board. As a result, the S&P 500 lost 0.8%, the Dow Jones fell 0.6%, and the Nasdaq Composite gave up 0.9%. For the week so far, the S&P 500 is down 0.3%, the Dow is 0.5%, the Nasdaq is up 0.3%.
Asian equities mostly fell on Friday amid hawkish signals on US interest rates as Powell warned that interest rates could still rise. Also, regional stocks stay pressured by weak economic readings from China, which showed that the economy was struggling to improve spending. Hong Kong’s Hang Seng index was leading losses with a 1.6% slide as SMIC shed over 4% after the company revealed an 80% slump in its third-quarter profit. In other stocks, SoftBank tumbled more than 6% after it reported an unexpected loss in the third quarter. Japan’s Nikkei 225, however, managed to trim intraday losses from nearly 1% to just 0.16%.
Similarly, European stocks retreated at the open on Friday as investors continued to digest Powell’s hawkish remarks. During the previous session, regional equities closed in positive territory, receiving a boost from a strong set of corporate earnings reports. On the data front, the UK GDP showed no growth in the three third quarter, following an increase of 0.2% the previous quarter. US stock index futures were little changed in early pre-market deals ahead of the weekend.
Meanwhile, the US dollar advanced on Thursday in the aftermath of hawkish remarks from Powell. The USD index extended gains to the 106.00 barrier that caps the momentum so far. At the start of the week, the greenback briefly derailed the 105.00 mark before bouncing to mark the fourth consecutive session of gains on Thursday. Now, the US currency needs to overcome the 106.00 hurdle in the near term. Otherwise, another retreat could take place should risk sentiment improves in the financial markets.