Equites are mixed on Thursday on reassuring comments on monetary-policy tightening from Federal Reserve Chair Jerome Powell while crude oil extended to new highs over intensity of the Russian-Ukraine war.
The CSI300 is down by 0.12% while KOSPI, HSI and TOPIX extended by 1.62%, 0.61% and 1.27% respectively.
Powell in testimony to U.S. lawmakers went in favor of Fed interest-rate liftoff and careful observation on inflation. He also noted the world’s biggest economy can weather higher borrowing costs.
The FED chair voice his support for quarter-point Fed rate hike later this month. He also indicated the central bank may have to take tougher action if price pressures don’t start to ease.
The U.S. 10-year yield — at about 1.85% — remains below the 2% levels seen before Russia’s action. The dollar ticked higher, while gold was steady.
The Fed chair managed to “appease risk-markets by ruling out a 50 basis-points hike in March, while simultaneously promising inflation vigilance at following meetings,” Citigroup Inc. strategists William O’Donnell and Edward Acton wrote in a note.
Fed Bank of St. Louis President James Bullard called for a “rapid withdrawal of policy accommodation,” while his Chicago counterpart Charles Evans said monetary policy is currently “wrong-footed” and needs to be upwardly adjusted toward neutrality.
“It’s really time for investors to be prepared for more volatility, especially in the bond markets” as the Fed has yet to commence balance-sheet reduction, Nancy Davis, chief investment officer at Quadratic Capital Management LLC, said on Bloomberg Television.
Oil ticked higher as shortfall of commodities are anticipated by the market. The U.S. WTI is trading at $113 per barrel while Brent is trading at $116 per barrel.
