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General Market Analysis | 10 November 2023

Stocks Hit After Hawkish Powell – Nasdaq Down 0.85%

Indices on Wall St took a hit yesterday as Fed Chair Jerome Powell delivered a far more hawkish message than investors wanted to hear, advising that the Fed is prepared to hike again in this cycle. The Nasdaq took the biggest hit, dropping 0.85% followed by the S&P, down 0.73% and the Dow which lost 0.63% on the day. Us Treasury yields jumped, with the benchmark 10-year gaining 11 basis points to move up to 4.622% and the 2-year moving back above 5% again after rising nearly 9 basis points. The dollar moved higher against the majors with the index gaining 0.35%, however, Gold and Oil bucked the over-dollar trend by gaining on the day.

Markets Face Inflation Reality Check into the Weekend

Global markets have been experiencing strong gains in stocks and risk trades over the last weeks trading after the latest pause from the Federal Reserve Bank, but Fed Chair Jerome Powell gave investors of a reality check by advising that rates may have to step up again to beat sticky inflation. His message hasn’t significantly changed from his post-meeting comments but it does seem like he felt that he had to rein in some of the dovish sentiment that permeated the market. Investors had been looking ahead to rate cuts in 2024 and this will pull back expectations somewhat but also confirms that the Fed is determined to get inflation to its target 2%. Traders are now expecting more volatile sessions into the weekend as some of last week’s optimism wains and markets react accordingly.

Busy Last Trading Day to the Week

Asian markets are set to open on the back foot today after Jerome Powell threw some cold water on market sentiment with his comments in the US session. However, there are some other key releases on the calendar that could hit markets as we move through the trading sessions. The APAC day will see the early focus on Australian markets with the release of the RBA’s Monetary Policy Statement. On the London open sterling traders are set to be busy with the UK’s GDP data due for release with a flat result expected for the headline month-on-month number. ECB President Christine LaGarde is set to speak again later in the day and in the US we have the Prelim University of Michigan Consumer Sentiment number due out.