European markets were flat on Tuesday as all eyes are on Jerome Powell’s impending congressional statement.
European markets are currently flat as investors await Federal Reserve Chairman Jerome Powell’s congressional testimony. For example, the pan-European Stoxx 600 was flat today as trading began, with most sectors hovering in slightly positive territory. Meanwhile, technology stocks fell 0.3% and led modest losses. By contrast, retail trade rose 0.8% to lead the gains.
Powell’s fiscal comments, which are due Tuesday and Wednesday, should provide more clues about the main bank’s rate-hike stance. In addition, investors, analysts and market watchers would also be listening to the Fed Chairman’s testimony for signs of economic health.
Powell would likely convince lawmakers of his commitment to tamp down inflation without compromising the rest of the US economy. Fears are already prevalent that the Fed’s relentless steep rate hikes could inadvertently trigger a recession.
Although US stock futures traded slightly higher amid flat European markets, trading in the Asia-Pacific region remained mixed.
US and Asia-Pacific performance amid flat European markets
In the US, the S&P 500 Index (INDEXSP: .INX) was up 0.1%, and Dow Jones Industrial Average futures (INDEXDJX: .DJI) were also up 0.1%. Also, the Wall Street Journal dollar index was steady at 97.51. However, the 10-year US Treasury yield fell 1.3 basis points to 3.952% from 3.965%.
Meanwhile, stock performance from Asia sent Japan’s Nikkei 225 Index up 0.3%. However, Hong Kong’s Hang Seng, by contrast, fell 0.3%, and the Chinese benchmark Shanghai Composite Index also fell 1.1%.
In addition to the Stoxx Europe 600 losing 0.2% in morning trade, HelloFresh was down 9% in Europe. The losses recorded were large, with NEL shedding 6.4% and the FTSE 100 shedding 0.1%. In addition, the French CAC 40 fell 0.2%, while Germany’s DAX fell 0.1%. The yield on the German 10-year bond fell 4.6 basis points, from 2.746% to 2.701%.
However, there were some top gainers amid the general setback in European stocks on Tuesday. For example, Zalando SE rose 4.2% while Ashtead Group rose 3.1% in the same period.
On the commodity side, Brent crude held steady at $86.18 a barrel. Furthermore, WTI crude oil was also flat at $80.45 a barrel on Tuesday.
US Treasury Yields Add to Sustained Fed Rate Hikes
Last week, the 2-year Treasury yield reached its highest point in 17 years amid sustained interest rate hikes from the Federal Reserve. The 2-year yield initially rose 4.937%, while the 10-year Treasury rose more than 3 basis points to 4.028%.
Last Wednesday, the president of the Federal Reserve Bank of Atlanta, Raphael Bostic, called for sustained higher rates to curb inflation. At the time, Bostic also addressed the delicate balance between higher rates and the associated hardship, saying:
“[Increasing interest rates] without inflicting severe economic pain is a delicate balance. But striking that balance is our job, since the Fed’s dual mandate is to seek price stability and sustainable full employment. In the long run, the latter cannot be achieved without the former.”
Bostic also said it would be unwise for the Fed to reverse its rate-hike policy now, suggesting a 5% and 5.25% increase.
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Tolu is a Lagos-based blockchain and cryptocurrency enthusiast. He likes to demystify the crypto stories down to the basics so that anyone anywhere can understand them without too much prior knowledge. When he’s not up to his neck in crypto-stories, Tolu likes music, loves to sing, and is an avid movie buff.
