© Reuters
Investing.com – Risk appetite fell globally after central bank meetings, led by the Federal Reserve, set the tone for major central banks, which followed suit. And the US Federal Reserve’s words caused gains to turn back into yields, which lifted and caused equities globally to fall.
US data came in again today, retail sales, which fell more than expected, and jobless claims data also came out better than expected, supported by Fed Governor Jerome Powell, saying the US market work is very strong, and it does not seem as if it will ease anytime soon. Powell’s words indicate that the Fed will keep monetary policy very tight until the job market calms down and unemployment rises.
US stocks
American is now down 2.55%, down 870 points, while it’s down 3.33%, and it’s index of 500 largest companies offered for trading in the US, down 2 .65%.
US stocks were in a buying frenzy following 2-month inflation data showing inflation had eased from its peak and Powell’s speech in early November on tapering rate hikes.
And Powell corrected the mistake this time, and did his best to explain to the markets that the Fed will move to a higher final interest rate than previously forecast, and interest will not decrease at all in 2023, and the final interest rate could exceed 5% and the rate is now at 4.50% after raising interest by 50 basis points yesterday.
Markets have this time understood Powell’s words that there is still a long way to go and that the Fed will do more to overcome the inflationary phase, and Powell will not retreat anytime soon from his restrictive stance, on the basis that liquidation is started last night and now the markets have deepened their losses.
major central banks
The tone from the Bank of England and the European Central Bank was similar to what Powell said, we will now raise interest at a slower pace, but there is a long way to go to fight inflation, which is at an all-time high always in the old continent.
It fell about 2% after the Central Bank’s decision to raise interest rates by half a basis point to 3.50% and the vote percentage indicated that there was disagreement within the Monetary Policy Committee, which has voted 6-3 in favor of the decision.
As for the Fed, it has decided to forego raising the interest rate by 75 basis points and to raise it by only 50 basis points, and has hinted to the market that it is possible to exceed the 5% level of final interest, a level that the Fed i markets had no news since 2007.
The Fed will continue to raise interest rates even if the economy falls into a recession.
Experts warn investors and ask them to be careful, as the Fed is trying to lower inflation without the economy entering a recession, but the attempts will most likely fail and the economy will enter a recession next year.
currencies
The dollar index, the main driver of commodity prices and major and minor currencies, decreased by more than 7% during the last quarter of the year. Today, however, it managed to overcome its steep losses, moving away from a 6-month low of 104.22, up 0.78%.
It fell 0.50% but remains above the parity level at 1.0627.
The goods are not happy
It fell sharply today, losing 1.58% to $1,778 an ounce in spot transactions, while gold futures were down $1,789 an ounce, a loss of 1.62%.
It was down 1.28% today to $81 a barrel on Brent contracts, and West Texas Intermediate crude contracts were down 76, down 0.87%.
