Announced turnaround in interest rates
Wall Street takes Fed decision hard
01/26/2022, 11:16 p.m
The US central bank is leaving the key interest rate close to zero, but statements by Fed boss Powell on future monetary policy are causing uncertainty among US investors. The markets, which recovered significantly at times, are once again experiencing turbulence. Among the day’s winners are Microsoft and Mattel.
Investors are reacting to the US Federal Reserve’s statements on monetary policy with mixed feelings. The US standard value index Dow Jones was unable to maintain its initial gains and closed 0.4 percent lower at 34,168 points. The technology-heavy Nasdaq was slightly up at 13,542 points. The broad S&P 500 lost 0.1 percent to 4349 points.
In view of the high level of inflation, the US Federal Reserve wants to quickly turn around interest rates and then reduce the bloated balance sheet. After the monetary policy meeting, she stated that an interest rate hike would be appropriate soon. According to Fed Chair Jerome Powell, monetary authorities stand ready to tighten in March if conditions warrant. Further increases throughout the year are likely to follow. There is “quite a lot of scope” for tightening without jeopardizing the recovery on the labor market.
For the time being, the Fed left the key rate in the range of zero to 0.25 percent. While the US Federal Reserve has signaled rate hikes, it remains vague on other issues, said Russell Price, chief economist at financial advisor Ameriprise. “There is still uncertainty surrounding the winding down of securities holdings.”
the dollar index, which tracks the rate against major currencies, benefited from the prospect of US interest rate hikes in the near future, rising 0.6 percent to 96.53 points. By contrast, investors withdrew from US government bonds. This drove the return of the pioneering ten-year treasuries to 1.8763 percent.
The price of oil also rose. However, fears of delivery failures due to tensions between Russia and Ukraine and attacks on crude oil infrastructure on the Arabian Peninsula are the reason for the rally, said analyst Stephen Brennock from brokerage house PVM Oil Associates. Therefore, the price of the US variety increased STI by 2.5 percent to $87.81 per barrel (159 liters).
In parallel with the stock market, cryptocurrencies also limited their gains. Bitcoin was last listed 0.9 percent up at $ 36,904.
Wall Street also received a tailwind from the surprisingly strong quarterly results and the optimistic outlook of the software company Microsoft. The prospect of accelerating growth in the Azure cloud division is a good omen for the entire industry, commented analyst Derrick Wood from Cowen. Microsoft-Shares rose 2.8 percent. The titles of were also in high demand mattel, which rose by 4.3 percent. The “Barbie” maker got the license rights for characters from Disney films like “Frozen” or “Cinderella” after more than seven years from the archrival Hasbro back. His papers then gave way a good six percent.
The papers from Boeing also went on a descent and lost 4.8 percent. The production problems with the long-haul plane 787 are causing the Airbus rival another loss of billions. The minus is many times higher than expected, criticized analyst Sheila Kahyaoglu from the investment bank Jefferies. A ray of hope, however, is the surprising inflow of cash.