Markets Update Wednesday 03/03/2022 – Fed Relief

Frankfurt – 03/03/2022

Fed Relief

The roller-coaster ride on the international stock markets continues. After the significant price losses at the beginning of the month, they rose sharply today. 

On the one hand, the Ukraine conflict makes the Fed more cautious, as Jerome Powell announced today. Still, on the other hand, the situation in Ukraine remains an unpredictable factor. 

“In the near term, the impact of the invasion of Ukraine, sanctions and coming events on the US economy remains highly uncertain,” the Fed president said in the US House of Representatives. He said it is still unclear how long economic distortions resulting from the conflict, such as higher oil and gas prices, will last. Therefore, the central bank would closely monitor economic developments and react “skillfully” to them, Powell promised. The Fed’s goal, he said, is to facilitate a “long recovery” that will further ensure a strong labour market.

US Markets at a glance

Thanks to the Fed, traders in the US were more confident today. The Dow Jones rose slightly at the start and then remained up. At close, it was up by 1.79 per cent to 33,891.35 points. The NASDAQ Composite tech index also began the session on a firmer note. It then moved into the green territory and closed 1.62 per cent higher at 13,752.02 index units.

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Investors continued to focus on the war in Ukraine. Russian forces had intensified their attacks on major Ukrainian cities. Another round of talks that could take place on Thursday provided hope among investors.

In addition, inflation also remained a burdening topic. After the International Energy Agency, the USA now also wants to release part of its strategic oil reserves is not able to slow down the rise. US Federal Reserve Chairman Jerome Powell also stated that he considered an interest rate hike in March likely. The Federal Reserve also presented its “Beige Book” economic report in the evening.

Far East Markets at a glance

In the Far East, the stock markets went down. In Tokyo, the Japanese benchmark index Nikkei lost 1.68 per cent to 26,393.03 points by the end of the session, while in China, the Shanghai Composite was 0.13 per cent lighter at 3,484.19 units. The Hang Seng was down 1.84 per cent at 22,343.92 points.

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The Ukraine war continued to have a negative impact. Inflation in an already inflationary environment is being fuelled, and supply chains are again being affected. In addition, the rise in oil prices to multi-year highs has triggered global growth fears.

European Markets at a glance

The European markets benefited from stronger US trading and were ultimately firmer. The EuroSTOXX 50 started trading slightly lighter and turned positive during the day. Most recently, it gained 1.45 per cent to 3,820.59 points.

The DAX opened the session lower but later made significant gains and ended the session 0.69 per cent higher at 14,000.11 points. The TecDAX also started weakly but closed 0.61 per cent firmer at 3,820.59 points.

The Ukraine war remained in the focus of investors. Meanwhile, US President Joe Biden’s State of the Union address was seen as slightly positive. The US president squared off with Russian leader Vladimir Putin over the war of aggression on Ukraine.

On the economic front, inflation data was released from the eurozone. Price pressures remain high, with eurozone inflation rising to a record high of 5.8 per cent in February.

Forex, gold oil and crypto

In late Forex trading, the euro rallied again and overcame the 1.11 dollar mark, which had acted as resistance in recent days.

Oil prices soared to new multi-year highs today. The price of Brent oil from the North Sea rose by up to 7.7 per cent to 113.09 dollars per barrel, the highest level in more than seven and a half years. Other commodities also cost significantly more. The corresponding futures contracts for coal and natural gas rose by 25 per cent to 250 dollars per tonne and a good 50 per cent to 185 euros per megawatt-hour, respectively. These are record levels.

The price for the troy ounce of gold dropped slightly after the Fed’s “positive signals”, closing at $1,929.

Cryptocurrencies hovered around the previous day’s levels, not making any big moves in any direction. Bitcoin traded at around $44,000, while Ethereum fought with the $3,000 round-mark. XRP hovered around $0.77, while Cardano couldn’t break the $1 mark and ultimately remained at $0.95. 

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Economic data

Inflationary pressure in the eurozone increased more significantly than expected in February. According to Eurostat’s release, consumer prices rose by 0.9 per cent from the previous month and were 5.8 (January: 5.1) per cent higher than in the same month last year, which was a new all-time high. Economists surveyed by Dow Jones Newswires had forecast a monthly price increase of 0.4 per cent and annual inflation of 5.3 per cent.

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