US, World Markets Retreat After Powell’s Hawkish Rate Stance

April 22, 2022
US, World Markets Retreat After Powell’s Hawkish Rate Stance
A currency trader holds his head at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, April 22, 2022. (AP Photo/Ahn Young-joon)

NEW YORK (AP) — Wall Street was pointed toward losses before markets opened on Friday, following global shares lower after Federal Reserve Chair Jerome Powell indicated aggressive increases in interest rates were needed to fight inflation.

The futures for the Dow industrials fell 0.3% while the same for the S&P 500 slipped 0.1%.

Most major global indexes declined, though Shanghai edged higher after authorities there promised to ease anti-virus controls on truck drivers that are hampering food supplies and trade. Oil prices fell more than $1 a barrel.

In a panel discussion held Thursday by the International Monetary Fund, Powell said the Fed must move faster than it has previously to tackle high inflation, which suggests sharp interest rate increases are likely in coming months.


The S&P 500 reversed direction after that, closing 1.5% lower on Thursday, while the Dow Jones Industrial Average fell 1% and the Nasdaq slid 2.1%. The Russell 2000 small caps index gave up 2.3%.

“Under the weight of war, global energy and food risk, equity markets may well begin to buckle, unfortunately in a rather spectacular manner. We have been saying for some time that the only way to protect your investment portfolio is to be cautious on equities and buying gold, oil and the U.S. dollar,” said Clifford Bennett, chief economist at ACY Securities.

The Fed has already announced a quarter-percentage point rate hike and Wall Street expects a half-percentage rate hike at its next meeting in two weeks. Other central banks have also moved to raise interest rates to try and temper the impact of rising prices on businesses and consumers.

Powell suggested that “there’s something in the idea of front-loading” aggressive rate hikes as the Fed grapples with inflation that has reached a four-decade high.

That suggests a half-point rate increase could be on the table when Fed officials hold their next interest rate and economic policy meetings May 3-4, Powell said. In the past, the Fed has typically raised its benchmark short-term rate by more modest quarter-point increments.

Investors are also watching for developments in Ukraine and a presidential runoff election in France this weekend.


Germany’s DAX fell 1.2% in midday trading Friday, while France’s CAC 40 slipped 1.4% and Britain’s FTSE 100 shed 0.4%.

In Asian trading, Japan’s benchmark Nikkei 225 dipped 1.6% to finish at 27,105.26. Australia’s S&P/ASX 200 dropped 1.6% to 7,473.30. South Korea’s Kospi shed 0.9% to 2,704.71. Hong Kong’s Hang Seng slipped 0.2% to 20,638.52, while the Shanghai Composite recouped earlier losses to edge up 0.2% to 3,086.92.

Japanese Finance Minister Shunichi Suzuki made comments seen as a slightly more forceful pushback against “sudden movements” in exchange rates after meeting with Treasury Secretary Janet Yellen on the sidelines of G-20 finance ministers’ meetings.

The U.S. dollar dipped slightly to 128.30 Japanese yen from 128.36 yen. The euro cost $1.0822, inching down from $1.0840.

The dollar has surged recently against the yen and other currencies and a growing gap between interest rates in Japan and some other Asian countries and rising U.S. interest rates is unlikely to abate.

An intervention, particularly from the U.S., may be coming, said Stephen Innes at SPI Asset Management.

“The BOJ is likely to remain steadfast in its approach to ultra-dovish monetary policy relative to its peers that implicitly welcomes yen depreciation,” Innes said, referring to Japan’s central bank.

In France, President Emmanuel Macron appeared to have widened his lead over far-right challenger Marine Le Pen, easing some worries about potential major changes in Europe. Macron has received support from the center-left leaders of Germany, Spain and Portugal, who urged in a newspaper editorial for French voters to shun the “extreme-right candidate” without mentioning Le Pen by by name.


Bond yields have been gaining ground as investors prepare for higher interest rates. The yield on the 10-year Treasury held steady on Friday at 2.92% after hovering near its highest levels since late 2018.

Benchmark U.S. crude fell $1.07 to $102.72 a barrel. It rose 1.6% on Thursday and is up roughly 40% for the year. That has made gasoline more expensive, which cuts deeper into consumers’ wallets. Brent crude, the international standard, lost $1.04 to $106.92 a barrel.

A+
a-
  • inflation
  • interest rates
  • Jerome Powell
  • stock market
  • Wall Street
  • In The News

    Health

    Voting

    Wall Street

    Class Action Suit Filed Against Silicon Valley Bank Parent

    A class action lawsuit is being filed against the parent company of Silicon Valley Bank, its CEO and its chief... Read More

    A class action lawsuit is being filed against the parent company of Silicon Valley Bank, its CEO and its chief financial officer, saying that company didn't disclose the risks that future interest rate increases would have on its business. The lawsuit against SVB Financial Group, CEO... Read More

    Fed, Set to Impose Smaller Hike, May Hint of Fewer Increases

    WASHINGTON (AP) — The Federal Reserve is poised this week to raise its benchmark interest rate for an eighth time since... Read More

    WASHINGTON (AP) — The Federal Reserve is poised this week to raise its benchmark interest rate for an eighth time since March. But the Fed will likely announce a smaller hike for a second straight time, and it could change some key wording in its post-meeting statement... Read More

    Wall Street Rallies, Heads for Winning Week After Weak Start

    NEW YORK (AP) — Wall Street is rallying Friday amid hopes inflation may continue to cool and the Federal Reserve... Read More

    NEW YORK (AP) — Wall Street is rallying Friday amid hopes inflation may continue to cool and the Federal Reserve may ease up on its hikes to interest rates following some mixed readings on the U.S. economy. The S&P 500 was 1.6% higher following a shaky... Read More

    Wall Street Subdued Ahead of Fed Interest Rate Decision

    Early trading on Wall Street is muted ahead of the Federal Reserve's final decision of the year on interest rates.... Read More

    Early trading on Wall Street is muted ahead of the Federal Reserve's final decision of the year on interest rates. Futures for the Dow Jones Industrial Average and the S&P 500 were flat Wednesday, shifting between tiny gains and losses. A 7.1% U.S. consumer price index reading for... Read More

    US Futures Point Higher, Adding to Thursday's Huge Gains

    Wall Street pointed higher in premarket trading Friday, adding to the hefty gains from a day earlier when government data... Read More

    Wall Street pointed higher in premarket trading Friday, adding to the hefty gains from a day earlier when government data showed that U.S. inflation eased more than expected, spurring hopes the Federal Reserve might scale down plans for more interest rate hikes. Futures for the Dow Jones... Read More

    US Inflation Pressures Further Intensified in September

    WASHINGTON (AP) — Inflation in the United States accelerated in September, with the cost of housing and other necessities intensifying... Read More

    WASHINGTON (AP) — Inflation in the United States accelerated in September, with the cost of housing and other necessities intensifying pressure on households, wiping out pay gains that many have received and ensuring that the Federal Reserve will keep raising interest rates aggressively. Consumer prices rose... Read More

    News From The Well
    scroll top