Fed Chairs & Inflation: pic.twitter.com/gDehd5nzjS
February 27, 2018
Stock markets across Asia have all fallen today, after Fed chair Jerome Powell’s hawkish comments reignited interest rate hike fears.
The Japanese and Hong Kong indices are leading the selloff, down 1,5% each. Here’s the damage:
Cautious investors are taking a “guarded approach”, says Lukman Otunuga, research analyst at FXTM:
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
City traders have one thing on their mind today (well two, if you include the snow gripping the capital). How many US interest rates rises are heading our way, and how will the markets cope?
For this, we can thank the new head of the Federal Reserve. As we covered in yesterday’s blog, Fed chair Jerome Powell struck an upbeat tone about the US economy when he faced Congress yesterday.
Powell told US lawmakers that he has become more optimistic about the US economic outlook since December, predicting some good years ahead with rising wages growth.
If he’s right, then it’s good news for Americans, but potentially bad news for investors as the Fed is more likely to tighten monetary policy to prevent inflation running out of control.
The big fear in the markets is that the Fed could squeeze four rate hikes into 2018, ending the era of cheap money.
Mike van Dulken of Accendo Markets explains:
Shares fell on Wall Street last night after Powell spoke, triggering losses in Asia overnight – and likely falls in Europe today. The FTSE 100 has just opened, down 36 points at 7245.
London stocks to ease lower at the open, matching UK temperatures. New Fed chief Powell repeated a view of gradual rate increases and the DJI lost 300pts over the session. Nikkei -1.4% too, US 10yr yield 2.90%. $ firmer across the board , 1.39 vs £.
There could be Brexit fireworks , as the EU publishes the first draft of the withdrawal treaty. This may bring the sticky question of the Irish border into renewed focus – Theresa May has already declared that she won’t sign anything that “threatens the integrity of the UK’
It’s Brexit’s big reckoning in Brussels today. All you need to know in this morning’s @ftbrussels briefing 📫📨 https://t.co/iRAYENCT09 pic.twitter.com/5ZgSDXiHnV
There could be drama in UK retail too, with Toys R Us and Maplin both on the brink of administration.
On the economic side, we get updated growth figures from the US and France, plus the first estimate of eurozone inflation .
7.45am GMT: New estimate of French GDP for Q4 2017
10am GMT: Flash estimate of eurozone inflation in February
1.30pm GMT: New estimate of US GDP for Q4 2017