Stock Market Searches For Direction As Traders Decipher Powell Testimony

07 March, 2018, 11:58 | Author: Lora Ball
  • Overnight Markets US stocks close sharply lower on rate worries

The yield on the key 10 year bond fell to 2.86% on Wednesday and to around 2.802% on Thursday - a sign that investors are selling out of shares and commodities and heading for the safest haven of all - US Treasuries.

"It's reasonable for markets to start repricing a possibility of higher inflation and higher interest rates", Sturkenboom said. Mainland markets traded slightly higher after recent losses: The Shanghai composite edged up by 0.15%.

Stocks were higher earlier in the day after Powell appeared to calm one of the market's main worries when he said that he does not see inflation in workers' wages "at a point of acceleration".

The fall was largely driven by new Federal Reserve Chairman Jerome Powell's unexpectedly hawkish tone on Tuesday where he presented an upbeat picture of the USA economy, opening up the option for more than three rate rises this year as inflation moves "up to target".

The Standard & Poor's 500 index tumbled 36.16 points, or 1.3 percent, to 2,677.67.

The late-day weakness underscored lingering skittishness amongst investors.

Overall the Dow .DJI lost 343.7 points, or 1.4 percent, the S&P 500 .SPX 29.03 points, or 1.1 percent and the Nasdaq Composite .IXIC 77.10 points, or 1.1 percent.

Stocks fell for a second straight day, with most of the losses coming in the final hour of trading after the S&P 500 dropped below its 50-day simple moving average (2,736).

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The new chair signalled the central bank could hike rates more than three times this year should economic and inflation data continue to prove healthy.

Booking Holdings Inc (BKNG.O), formerly known as Priceline, rose 6.8 percent after reporting upbeat quarterly profit, helped by higher hotel bookings, while off-price apparel seller TJX (TJX.N) jumped 6.9 percent after posting upbeat same-store sales.

SHARP BITE: Patterson Companies fell to the biggest loss in the S&P 500 after it reported weaker earnings for the latest quarter than analysts expected and said that its chief financial officer was leaving.

Caterpillar (CAT) and Boeing (BA) racked up the heaviest early declines on the Dow, off more than 1% each.

Energy (-2.3%) was the weakest of the S&P 11 industry groups, moving lower alongside the price of crude oil after the weekly USA crude oil inventory report showed inventories rising by 3M barrels last week; April WTI futures dropped 2.2% to $61.64/bbl. Benchmark U.S. crude fell 65 cents to settle at $60.99 per barrel.

It has also fallen against the British pound (-0.4pc), euro (-0.2pc) and Japanese yen (-0.5pc). The FTSE 100 in London dropped 0.8 percent.

Japan's Nikkei 225 declined 1.39%.

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