facebook linkedin twitter

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-

In The News

Health

Voting

Wall Street

Wall Street Slumps, Erasing a Big Rally From a Day Earlier

NEW YORK (AP) — Stocks are slumping on Wall Street, erasing a rally from a day earlier, as markets assess... Read More

NEW YORK (AP) — Stocks are slumping on Wall Street, erasing a rally from a day earlier, as markets assess the looming fallout from the Federal Reserve’s stepped-up fight against inflation. On Wednesday, the Fed raised its benchmark interest rate by half a percentage point as part of... Read More

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

NEW YORK (AP) — Wall Street was pointed toward losses before markets opened on Friday, following global shares lower after... Read More

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... Read More

Wall Street Heads for Gains after World Shares Sink

Wall Street pointed toward gains in premarket trading Tuesday after world share prices sunk lower, with Hong Kong down almost... Read More

Wall Street pointed toward gains in premarket trading Tuesday after world share prices sunk lower, with Hong Kong down almost 6% and Shanghai losing 5%. Oil prices slid about 8% as virus lockdowns and rising numbers of COVID cases in China threaten to disrupt manufacturing and... Read More

World Shares Mixed, Oil Down $5.50 Per Barrel

BANGKOK (AP) — Shares rose in Europe after a mixed session in Asia on Monday, where Hong Kong’s Hang Seng... Read More

BANGKOK (AP) — Shares rose in Europe after a mixed session in Asia on Monday, where Hong Kong’s Hang Seng index sank 5% after the neighboring city of Shenzhen was ordered into a shutdown to combat China’s worst COVID-19 outbreak in two years. Benchmarks rose in... Read More

Stocks Slip on Wall Street as Oil and Inflation Worries Rise

NEW YORK (AP) — Stocks slipped on Wall Street Thursday as global markets remain choppy amid uncertainty about where inflation,... Read More

NEW YORK (AP) — Stocks slipped on Wall Street Thursday as global markets remain choppy amid uncertainty about where inflation, interest rates and the global economy are heading. The S&P 500 slumped 1.2% in morning trading, on pace for its fifth drop in the last six... Read More

Wall Street Eyes Rebound, European Stocks Surge on Diplomacy

NEW YORK (AP) — Wall Street futures rebounded Wednesday and European shares rose sharply as investors eyed diplomatic efforts to... Read More

NEW YORK (AP) — Wall Street futures rebounded Wednesday and European shares rose sharply as investors eyed diplomatic efforts to end Russia's attack on Ukraine, while Asian markets sank after Chinese inflation accelerated. Futures for Wall Street’s S&P 500 index rose 1.8% and the same for... Read More

News From The Well
scroll top