Federal Reserve (Fed) Chairman Powell testified to the Senate Banking Committee that he would be firmly committed to rapidly reducing the inflation rate, and pointed out that the U.S. economy can withstand more tightening policies and must bring inflation back to the 2% target. , U.S. stocks opened lower on Wednesday (22nd) affected by Powell’s hawkish speech, giving back most of the gains in the previous trading day.
Before the deadline, the Dow Jones Industrial Average fell nearly 280 points or nearly 1%, the Nasdaq Composite fell nearly 50 points or nearly 0.5%, the S&P 500 fell nearly 0.7%, and the Philadelphia Semiconductor Index fell more than 1%.
The market’s optimism about the Fed’s aggressive tightening of monetary policy to curb inflation and achieve a soft landing for the economy has disappeared. In addition, concerns about the economy have spread to commodities, leading to a monthly decline in crude oil prices.
In a new note to clients, Citigroup’s chief global economist (Nathan Sheets) put the probability of a recession at 50%. Similar to its Wall Street counterparts, Sheets sees the perfect storm of Fed rate hikes and high inflation as increasingly weighing on consumer spending and economic output.
Crude oil prices continued to fall amid fears that the global recession would hit demand, while the outbreak in Macau also dampened market sentiment. Brent crude oil, which expired in August, and West Texas crude oil, which expired in August, both fell more than 6% by the time of writing. .
On the other hand, the soaring oil prices in the United States have caused widespread anger among the people, and the important midterm elections are only a few months away. Today, US President Biden will ask Congress to suspend the collection of federal gasoline taxes for 3 months, but whether these measures can be effective at present Curbing oil prices is unclear.
In terms of cryptocurrencies, Ian Harnett, co-founder and investment strategist at Absolute Strategy Research, said a few days ago that Bitcoin could plummet further to a key support zone of $13,000, a drop of nearly 40% from its current price level. He sees Bitcoin as a “liquidity game,” neither a currency nor a commodity, nor even a store of value.
In Europe, the UK consumer price index (CPI) hit a 40-year high of 9.1% in May as food and energy prices continued to significantly reduce consumers’ disposable income. However, core inflation was lower than expected due to lower spending on discretionary goods.
As of 21:00 on Wednesday (22nd) Taipei time:
Stocks in focus:
Revlon (REV-US) rose 33.17% to $8.07 a share in early trade
After the international well-known beauty brand filed for bankruptcy in the court a few days ago, the stock price once fell to the freezing point of 1.5 US dollars per share. However, last week, it was reported that the Indian multinational company Reliance Industries intends to acquire, and the stock price closed up more than 91% that day. Retail investors took the opportunity to hunt for the bottom, and the stock price once soared to $6.84 per share, but the final increase converged to 62.47%, at $6.06 per share.
Airbnb (ABNB-US) fell 2.83% to $99.38 a share in early trade
Wall Street brokerage JMP said it downgraded Airbnb from “market outperform” to “market perform” as the rise in travel demand after the COVID-19 pandemic has been reflected in Airbnb’s valuation, news Shares of Airbnb fell more than 3% in premarket trading.
Lockheed Martin (LMT-US) was down 0.57% at $416.58 a share in early trade
Lockheed Martin said today it may ship the first F-35 fighter jet to Germany in 2026, and expects more orders for the plane in Europe as Greece and the Czech Republic express interest . According to Reuters, Finland has ordered four warships and 64 F-35 fighter jets from Lockheed Martin, and it also plans to buy 2,000 more drones to strengthen its combat capabilities.
Today’s key economic data:
Wall Street Analysis:
Paul Donovan, chief economist at UBS Global Wealth Management, said the market has been rocking between recession and inflation fears, and the mood is now leaning toward recession fears.
With the Fed’s optimism that the Fed will actively tighten monetary policy to curb inflation and achieve a soft landing of the economy disappears, hedge fund boss Ray Dalio warned that reducing inflation will only pay a huge price, and investors’ anxiety about economic growth is accumulating.
Saxo Bank foreign exchange strategist John Hardy said that under the pressure of inflation, interest rate hikes and economic recession, U.S. stocks closed in the red yesterday, and market sentiment quickly turned to be worth noting. In addition, the commodity market seems to be announcing that the global economy will be heading for recession. However, he said the dollar was turning stronger and becoming a safe haven.