Global markets: US, European stocks dip after Powell’s hawkish remarks
Both the US and the European stock markets fell on Tuesday following Federal Reserve chair Jerome Powell’s hawkish remarks in his testimony before the US Congress.
Jerome Powell said on Tuesday that Federal Reserve is likely to increase interest rates higher than earlier anticipated.
“Although inflation has been moderating in recent months, the process of getting inflation back down to 2% has a long way to go and is likely to be bumpy,” Powell said before the Senate Banking Committee.
“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
All the three major US stock indices plunged more than 1%. The Dow Jones Industrial Average fell 1.67% to 32,873.09. The S&P 500 declined 1.55% to 3,985.77. The Nasdaq Composite fell 1.2% to 11,535.54.
The US dollar gained against the British pound, euro and yen as higher rates make the greenback more attractive to investors.
European shares
The pan-European STOXX 600 index declined 0.8% on Tuesday. Realty and technology stocks fell the most.
France’s CAC 40 fell 0.5% at 7,339.27. Germany’s DAX lost 0.6% at 15,559.53.
Britain’s FTSE 100 edged lower 0.1% to 7,919.48.
Asian stocks
Asian stocks fell on Tuesday on weak Chinese economic data.
China’s exports and imports fell sharply in January-February this year, data showed on Tuesday.
Hong Kong’s Hang Seng fell 0.3%. The Shanghai Composite index slipped 1.1%. South Korea’s Kospi gained less than 0.1%.
Japan’s Nikkei 225 rose 0.3%.
The MSCI index of Asia-Pacific shares, outside Japan, fell 0.83%.
Australia’s S&P/ASX 200 gained 0.5%.
Bullion
Gold prices declined over 1% on Tuesday, as the US dollar rose after Powell’s comments in his testimony.
Spot gold fell 1.8% at $1,813.11 per ounce by 1854 GMT.
Spot silver dipped 4.7% to $20.04 per ounce.
Aftet the Powell’s testimony, investors’ focus will shift to US jobs data for February that is to be released on Friday.
Crude oil
Oil prices fell more than 3% on the strengthening dollar and worries over slowing demand.
US crude tumbled 3.58% to $77.58 per barrel. Brent settled at $83.29, down 3.35%.
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