Stocks stable near record highs after cautious fed
Global stocks trade little changed but slightly higher Monday after the S&P 500 and Nasdaq 100 posted record closes Friday in the wake of Fed Chairman Jerome Powell's Jackson Hole speech. Europe is also trading positive, with the broad Stoxx Europe 600 near all-time highs. Stocks in Asia and Australia are higher, supported by bargain hunting in China/HK markets. While central banks have repeated in recent weeks/months that they plan to reduce monetary stimulus in the foreseeable future to keep inflation in check, Jerome Powell positioned himself more dovish than most analysts had expected. Powell said the Fed may begin reducing the massive stimulus later this year. However, Powell said the Fed is in no hurry to take action, especially not to raise interest rates. The key 10-year US Treasury yield fell to levels around 1.3%. The USD is stable today after falling sharply on Friday. Oil traded higher on Friday along with other commodities, but moved lower on expectations that OPEC+ will increase supply. Gold is little changed and bitcoin continues to hover around $48,000.
Rarely have opinions been so far apart as to how the Fed will position itself and, above all, how it should position itself. In the end, Fed Chairman Powell surprised the markets with a very dovish current positioning of the Fed. Wall Street remains strong and continues to be supported by the positive statements of Powell, who continues to see the US economy on a good path and also said that the Fed's inflation targets have already been achieved. On the other hand, uncertainties also remain, such as continued concerns that a global economy slowdown, that the inflation spiral (especially in the US) will continue to turn, and that the end of cheap money will trigger a correction. I can understand the fears of the correction and also assume that there will be a countermovement in any case when the Fed starts to gradually reduce stimulus measures. The markets currently remain in a risk-on mood, so we will continue to see stocks climb slightly higher. The S&P 500 is already up more than 20% in 2021, but continued high stimulus, strong quarterly results and reopening momentum leaves room for upside. The dollar will remain stable, but may well recover from recent losses towards Friday, provided US non-farm payrolls are positive. Volatility overall will remain relatively low as markets continue to look for more guidance.
Rarely have opinions been so far apart as to how the Fed will position itself and, above all, how it should position itself. In the end, Fed Chairman Powell surprised the markets with a very dovish current positioning of the Fed. Wall Street remains strong and continues to be supported by the positive statements of Powell, who continues to see the US economy on a good path and also said that the Fed's inflation targets have already been achieved. On the other hand, uncertainties also remain, such as continued concerns that a global economy slowdown, that the inflation spiral (especially in the US) will continue to turn, and that the end of cheap money will trigger a correction. I can understand the fears of the correction and also assume that there will be a countermovement in any case when the Fed starts to gradually reduce stimulus measures. The markets currently remain in a risk-on mood, so we will continue to see stocks climb slightly higher. The S&P 500 is already up more than 20% in 2021, but continued high stimulus, strong quarterly results and reopening momentum leaves room for upside. The dollar will remain stable, but may well recover from recent losses towards Friday, provided US non-farm payrolls are positive. Volatility overall will remain relatively low as markets continue to look for more guidance.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.