Markets in Flux After Powell Testimony – Nasdaq Hit 1.2%
US markets had a mixed reaction to Federal Reserve Chair Jerome Powell’s testimony before the House Financial Services Committee, stock markets took a big hit on hawkish rhetoric, yet the currency markets felt that he was not hawkish enough and smashed the greenback. The major US indices all finished well in the red for the third straight day with the Nasdaq leading the way, dropping 1.21% on the day, heavily influenced by a 5.5% slide for Tesla. The Dow and S&P also suffered on the day, losing 0.3% and 0.52% respectively. The dollar index dropped 0.43% with the Euro surging to fresh monthly highs, up 0.63% on the day.
Bank of England Ahead
We have a crucial rate decision ahead of us in the UK tonight which could see the pound move aggressively depending on the outcome. Yesterday’s CPI numbers confirmed that the Bank of England’s battle with inflation is far from over and it has heightened fears that the “Old Lady” will put 50bps on the current rate rather than the 25bps that had been expected. Sterling has had a strong rise over the last few weeks against the dollar and on the crosses and if the MPC ‘rises’ to the occasion then expect further topside potential.
More Volatility Ahead Today
Investors are preparing for another roller-coaster day in financial markets today with key central bank decisions due as well as tier 1 data a further testimony from the Fed Chair. The Asian market has opened on the back foot after a weak day on Wall Street and there is little out on the calendar to disrupt that sentiment. However, once the European begins things could change as we are hit with 2 major central bank rate calls, first from the Swiss National Bank and then from the Bank of England. The US session is set to see further volatility with the weekly unemployment data due out followed by Jerome Powell’s testimony in front of the Senate Banking Committee.
