© Reuters
nvesting.com – US Federal Reserve Chairman Jerome Powell will assess the state of the US economy in what will be his last major speech before the next Fed monetary policy meeting. Xi Jinping and the Chinese foreign minister have spoken out against US efforts to contain China, House Speaker Kevin McCarthy is preparing to meet Taiwanese leader Tsai Ing-wen, and Germany is reportedly preparing to ban Huawei and ZTE from parts of its 5G network. Meta* is preparing another major round of job cuts, less than four months after the last one. Australia continues its global upward trend in interest rates, and oil prices fell off their highs after weak trade data from China offset Saudi Arabia’s price hikes. Here’s what you need to know about the financial market on Tuesday, March 7th.
1. Powell in Congress
Fed chief Jerome will head to Capitol Hill for a congressional hearing as market expectations for Fed policy increasingly diverge from the Fed’s official forecast.
Implied forward rates indicate that the market is expecting a final Fed funds rate of 5.5%, while the Fed’s “scatter chart” suggests that the rate will peak at 5.25%. A number of Fed officials said they believe the market is right, so the focus will be on whether Powell confirms this opinion.
Powell is due to start speaking at 10:00 AM ET (15:00 GMT).
2. China angrily condemned US containment
China has lashed out at the US for its “total encirclement, containment and suppression” policy, which it says is leading to conflict.
At separate events, both the country’s leader Xi Jinping and Foreign Minister Qin Yang have criticized the U.S. as U.S. efforts to rid its allies of China complacency appear to be gaining momentum, with Germany set to ban telecoms equipment supplier Huawei and telecoms company ZTE (HK: ) is using part of its 5G network, Reuters reported, and Canadian Prime Minister Justin Trudeau has ordered a new investigation into allegations of Chinese interference in his country’s elections.
Fears that such rhetoric could escalate into hostile action were highlighted when Taiwan’s premier Tsai Ing-wen convinced House Speaker Kevin McCarthy to meet with her in the US rather than Taiwan. A visit to the island by McCarthy’s predecessor Nancy Pelosi last year infuriated Beijing.
3. US stock market drifts ahead of Powell’s speech; Meta considers job cuts
US stocks are in limbo ahead of Jerome Powell’s speech to the Senate Banking Committee later.
By 6:25 am ET, Na futures were up 19 points, or less than 0.1%, while Na futures were up 0.2% and Na futures were up 0.3%.
Nasdaq futures were supported by Meta Platforms (: ) stock, which rose in premarket trading after Bloomberg reported that the company was planning another major round of job cuts less than four months after it cut 13% of its workforce in trying to restore profitability.
Dick’s Sporting Goods (NYSE: ) will top the list of companies to report first in line, while cybersecurity specialist CrowdStrike (NASDAQ: ) will be the largest to report after the market closes. Shares of Danish brewer Carlsberg (CSE:) tumbled on the Copenhagen stock exchange after announcing that its CEO is leaving his post.
4. Australia raises rates again as European data surprises up
The day before, there was evidence that other central banks are also reacting to stronger-than-expected performance of their economies in the winter.
Bank of England Monetary Policy Committee member Katherine Mann – admittedly one of the committee’s more hawkish members – again insisted on the need for more action after a winter that passed without the feared UK energy emergency. In the eurozone, Germany reported stronger-than-expected growth in factory orders in January and revised its December data higher. Industrial production in Spain also surprised upwards. However, the main news of the day was a massive wave of strikes in France.
Meanwhile, the Reserve Bank of Australia raised its cash by 25 basis points to a 10-year high of 3.6% but fell as the market bet that the RBA could pause before another rate hike.
5. Oil falls on weak Chinese trade data; API data will be released
Crude oil prices fell after trade data from China showed imports came in below expectations, down 1.3% year-on-year in the first 2 months of 2023.
By 06:45 AM ET, futures for on were down 0.7% to $79.92 a barrel, and on futures fell 0.7% to $85.61 a barrel.
Prices previously rose earlier in response to Saudi Arabia’s increase in official selling prices for April by about 50 cents, reflecting confidence that the ongoing recovery will gradually tighten the market throughout the year, pushing up prices.
US oil inventories data from the American Petroleum Institute will be released as usual at 4:30 pm ET. Analysts are expecting a pause in the recent streak of rising domestic inventories.
*Meta is recognized as a terrorist organization in Russia and banned
Written by Geoffrey Smith
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