AP – Wall Street teetered between gains and losses in premarket trading yesterday ahead of a discussion with Federal Reserve Chair Jerome Powell that might give clues about the central bank’s interest rate plans for 2023.
Futures for the benchmark S&P 500 index inched up 0.1 per cent. The Dow Jones Industrial Average was unchanged.
Last week’s unexpectedly strong United States (US) data on hiring and wages dampened hopes the Fed would be satisfied with a series of aggressive rate hikes over the past year to cool inflation, and would ease off. The Fed last week raised rates by another quarter point, its eighth hike since March, and said inflation is still too high.
During a scheduled interview at the Economic Club of Washington, DC yesterday, Powell is “likely to repeat that inflation is still too high” and the “policy rate will have to rise”, said Rubeela Farooqi and John Silvia of High-Frequency Economics in a report.
There is concern that the Fed and other central banks might tip the global economy into recession, collateral damage from the fight against inflation.
In Europe at midday, the FTSE 100 in London gained 0.5 per cent, Frankfurt’s DAX fell 0.2 per cent and the CAC 40 in Paris was flat.
In Asia, the Nikkei 225 in Tokyo lost less than 0.1 per cent to 27,685.47 after the government reported wages rose 4.8 per cent over a year earlier in December. That was close to a three-decade high as workers press for higher pay to keep pace with inflation.
The Shanghai Composite Index rose 0.3 per cent to 3,248.09 and the Hang Seng in Hong Kong advanced 0.6 per cent to 21,298.70. The Kospi in Seoul added 0.6 per cent to 2,451.71.
Sydney’s S&P-ASX 200 lost 0.5 per cent to 7,504.10 after the Reserve Bank of Australia (RBA) raised its benchmark rate by 0.25 percentage points to 3.35 per cent. The RBA said more hikes are planned to lower inflation that is at a 33-year high of 7.8 per cent to its target range of two per cent to three per cent.
India’s Sensex fell 0.4 per cent to 60,284.40. New Zealand and Singapore declined while Jakarta and Bangkok advanced.
The yield on the two-year Treasury, which tends to track expectations for the Fed, leaped by an unusually wide margin to 4.47 per cent from Friday’s 4.29 per cent and the previous day’s 4.1 per cent. The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, jumped to 3.64 per cent from 3.52 per cent late Friday.
In energy markets, benchmark US crude gained USD1.15 to USD75.26 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 72 cents to USD74.11 on Monday. Brent crude, the price basis for international oil trading, advanced USD1.07 to USD82.06 per barrel in London. It added USD1.05 the previous session to USD80.99.
The dollar fell to JPY132.10 from Monday’s JPY132.67. The euro declined to USD1.0708 from USD1.0728. Yesterday, the S&P 500 fell 0.6 per cent and the Dow lost 0.1 per cent. The Nasdaq composite tumbled one per cent.
