- Fed members agree to cut assets by $1 trillion a year
- Dollar rally continues
- Yields fall back slightly
Key Events
US futures on the Dow Jones, S&P 500, NASDAQ 100 and Russell 2000 moved slightly higher on Thursday after two days of declines on Wall Street. Wednesday's release of the FOMC minutes from the last Federal Reserve meeting confirmed the more hawkish stance of US central bankers. European equities also traded higher.
Gold rallied as worries regarding the war in Ukraine and global inflation persist.
Global Financial Affairs
The publication of the Fed minutes reinforced recent comments from its members around the likelihood of a 50 basis point increase in rates at the next meeting in May as well as the rapid rollback of its balance sheet.
On Thursday, contracts on the NASDAQ 100 were leading the other major indices in trading ahead of the New York open. This is somewhat ironic as the technology sector is the most likely to feel the pressure of more rapid Fed tightening. Higher interest rates would weigh more on stocks with higher valuations.
In Europe, shares rebounded from yesterday's sharp decline led by the defensive, healthcare sector. The pan-European STOXX 600 fell 1.5% on Wednesday, suffering its worst selloff in a month.
The European benchmark was squeezed between the falling 100 DMA and flat 50 DMA. The slide in the 100 DMA, which is bearing down on the price is a bearish display, even more so after the it crossed below the 200 DMA, resisting any price rise.
Asian stocks sold off after the release of the Fed minutes revealed that US policymakers mostly agreed to reduce the central bank's assets by up to $95 billion a month in its fight against the worst inflation in over four decades.
US stocks and long-dated Treasuries continued to lose ground on Wednesday. The S&P 500 fell 1%, while the NASDAQ slid 2.2%.
Treasury yields on the 10-year note eased below 2.6%, as we suggested based on yesterday's trading pattern.
Rates developed a bearish Shooting Star, a small natural body—the range between the opening and closing price—with an exceptionally long upper shadow, or the intraday high. This candle suggested a return move toward the bullish flag yields completed on Tuesday.
Dollar bulls liked what the Fed had to say, bidding up the index for a sixth day in a row.
Trading confirmed the upside breakout of the USD's range, reinforcing the rising trend that continues after an H&S Continuation pattern.
Gold rebounded, despite a strengthening dollar. The yellow metal remains in hot demand as inflation uncertainty and geopolitical worries surrounding the conflict in Europe continue.
The price of the precious metal may still be developing an H&S top.
Bitcoin appeared to find its footing after sliding the most in a month amid risk aversion.
Yesterday, we raised a concern that the digital currency could be developing a pennant, bullish after the preceding sharp incline. Nevertheless, we maintained our bearish position. Wednesday's selloff blew out the pennant, reinforcing the resistance of the H&S neckline.
Oil prices attempted to snap back, as dip buyers took advantage of what they considered a bargain since demand in China has deteriorated due to the recent coronavirus outbreak. Nevertheless, the Russian ruble's return to pre-incursion prices demonstrates that the world's second-largest exporter can sell its oil uninterrupted, keeping its supply running.
WTI slipped below the bottom of a Symmetrical triangle. If prices fall below 93, we'll consider the pattern bearish.
Up Ahead
- Federal Reserve members Evans, Bostic and Williams are all due to speak after the US open today.
- Canada publishes employment figures on Friday.
- Reserve Bank of India rate decision Friday
Market Moves
Stocks
- The STOXX Europe 600 rose 0.4%
- Futures on the S&P 500 rose 0.2%
- Futures on the Nasdaq 100 rose 0.3%
- The MSCI Asia Pacific Index fell 1.3%
- The MSCI Emerging Markets Index fell 1.1%
Currencies
- The Dollar Index was little changed
- The euro was little changed at $1.0898
- The Japanese yen was little changed at 123.77 per dollar
- The offshore yuan was up 0.1% at at 6.3657 per dollar
- The British pound rose 0.1% to $1.3080
Bonds
- The yield on 10-year Treasuries declined two basis points to 2.57%
- Germany's 10-year yield fell one basis point to 0.63%
- Britain's 10-year yield declined one basis point to 1.69%
Commodities
- WTI crude advanced 0.46% to $96.69
- Brent crude rose 1.7% to $102.87 a barrel
- Spot gold rose 0.1% to $1927.26