166 views

Stock Futures Reacting To Jerome Powell’s Comment

Stock Futures Reacting To Jerome Powell’s Comment

Stock futures in Europe and the United States are trading higher following Federal Reserve Chair Jerome Powell’s appearance before the House of Representatives yesterday, which provided some relief to investors who had previously panicked due to his hawkish tone at the Fed’s meeting last week. Yesterday, big technology in particular rallied, with the bulls, propelling the Nasdaq to a new intraday high.

Stock Market

Jerome Powell reiterated the Fed’s dovish stance on its monetary policy yesterday, stating that the central bank will patiently monitor the economic situation before taking any measures related to its current policy. He also stated that the central bank is prepared to implement measures to support the economic recovery. The chair’s appearance followed the upheaval caused by Fed officials last week, who pushed forward the timeline for projected interest rate hikes from 2024 to 2023.

Moving onwards, communication by officials is likely to be cautious as they don’t want to seem too hawkish and raise concerns for investors. The chair admitted that inflationary pressures appear to be more persistent than previously anticipated, but added that the Fed will not raise interest rates simply because it believes the unemployment rate is too high or that inflation will worsen, but will instead make decisions based on hard facts.

Stock traders are waiting for word on when the Fed will begin to reduce its monthly bond purchases of $120 billion, which have been supporting the economy since the coronavirus pandemic began.

Yesterday, the Nasdaq, the tech-savvy index, outperformed, rising 0.8 percent and setting a new all-time intraday high. The Dow Jones Industrial Average gained 0.2 percent, while the S & P 500 gained 0.51 percent.

Microsoft

Following the rally in big tech yesterday, Microsoft joined Apple in the $2 trillion club briefly, before falling back to $1.9997 trillion.

Bitcoin

The bears took control of the crypto market yesterday, with the king of digital currencies dipping below the $30,000 mark and posting negative returns for 2021, before bouncing back to positive territory. The digital currency has recently come under fire as a result of increased crackdowns around the world. China, in particular, has been at the forefront of the rise in strict controls, causing Bitcoin to struggle to reclaim its earlier highs.

However, not everything is negative, as institutional investors remain interested in the blockchain industry. This momentum can be seen in Blockchain Capital, a crypto venture capital firm, which recently raised $300 million in funding from industry titans such as Visa and PayPal. Since its inception eight years ago, Blockchain Capital has invested in over 110 startups.

The continued interest of institutional investors demonstrates that the future of cryptocurrencies is very likely to be promising, and the recent drop in the value of Bitcoin may be an opportunity for investors to purchase the asset at bargain prices, increasing the number of players in the crypto space.

Forex 

The dollar index measures the green dollar against other major countries. It has dipped to 91.775 from a two-month high of 92.408 reached last week. The slump in gains is because of the Fed’s signal that the hike in rates will be carried out earlier than previously expected. As a result, the index has given up one third of its gains posted since last week.

After betting Against GameStop, a Hedge Fund was Shut Down.

White Square Capital, a hedge fund based in London, is closing its doors after betting against GameStop during its first rally in January. As a result, the fund experienced double-digit percent losses earlier this year. Following its losses, the company announced in June that it would close its primary fund and return capital to investors.

Geopolitical Tension

Armin Laschet, the frontrunner for the next German chancellor, agrees with Angela Merkel, the German Chancellor, that the United States should collaborate with China rather than work to limit its rise to power. The German leader also requested that the relationship with Russia be brought back from the brink of collapse.

During the G7 meeting earlier this month, President Biden attempted to rally Western countries against China’s growing influence. He believes that China’s Belt and Road Initiative should be met with a democratic alternative, such as providing funds and assistance to developing countries to assist them in addressing environmental concerns and building much-needed infrastructure.

The ramifications of President Biden’s stance could spark a conflict between the two superpowers, causing financial market uncertainty and, ultimately, harming investors.

Dow Jones 

Many blue chip stocks in the Dow index rose by nearly 1%. Nike, Home Depot, and Apple were among the best performers, while Verizon, Intel, and Travelers were among the laggards.