US equities rise on dovish Powell

Stocks resume their climb

Fed Chairman Jerome Powell stuck to his script last night, as he beat the transitory inflation drum and dampened expectations of a  rate hike. Although the reaction in markets was not spectacular, Powell’s comments greenlighted a further recovery in US stocks overnight, with technology leading the way as the Nasdaq climbed 0.79%. Meanwhile, the S&P 500 rose 0.51%, while the Dow Jones edged 0.20% higher. Futures on all three have increased around 0.20% today, further underpinning sentiment in Asia.

Japan markets have paused for breath after a wild couple of days, the Nikkei creeping just 0.10% higher, while the Kospi has rallied by 0.45%. Mainland China is also enjoying a positive day, with the Shanghai Composite and CSI 300 rising by 0.45% and 0.75%, respectively, while Hong Kong, home to many China technology behemoths, has leapt 1.50% higher.

Singapore has risen 0.55% after Global Foundries announced a USD4 billion investment and vote of confidence in the city-state. Kuala Lumpur bucks the trend, falling 0.30%, with Taipei rising 0.30% while Jakarta remains unchanged.

Rising Covid-19 cases in Sydney have prompted other states and New Zealand to close their borders to Sydney travellers. That appears to have sapped sentiment, with tourism also likely to take a hit, as it comes just before the school holidays. That sees the ASX 200 falling 0.40%, while the All Ordinaries has fallen by 0.30%. The trajectory of the Sydney outbreak may well subsume other directional indicators for Australian stock markets for the rest of the week.

Like Wall Street overnight, Asian markets that are more high-tech-heavy appear to be modestly outperforming this afternoon. European markets should open modestly higher ahead of their PMI dump, but markets will still be vulnerable to headline and Fed-speak whipsaws for the rest of the week.

A softer Durable Goods and PCE Prices from the US tomorrow may also dampen the taper-tantrum nerves, which have calmed considerably since last week.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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