US equities skid on hawkish Fed statement | IFCM
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US equities skid on hawkish Fed statement

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    2023/02/27
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US stock market advance stalled last week as the Federal Reserve hiked rates and indicated plans of more aggressive monetary tightening than those signaled after its last meeting. The SP 500 inched up 0.01% and the ICE dollar index rebounded 1.3% for the week.

The dollar resumed advancing last week as the ICE US dollar index rose every session except Wednesday and Friday. The dollar ended fractionally higher Monday and rose 0.2% Tuesday as inflation rose to 2.8% in May from 2.5% in April, in line with expectations. The ICE dollar index fell 0.3% Wednesday as Federal Reserve raised its benchmark federal funds rate by a quarter percentage point to a range of 1.75% to 2%, which was widely expected. The dollar rallied 1.4% Thursday as the European Central Bank said rates would remain at their present lows “at least through the summer of 2019 ”. The dollar index retreated 0.1% Friday.

The SP 500 advanced every session except Wednesday and Friday last week. The broad market index gained 0.1% Monday, ending 0.2% higher Tuesday. SP 500 lost 0.4% Wednesday as majority of Fed policy makers indicated four rate hikes will be needed this year, up from three rates projected previously. The big cap stock market index recovered 0.3% Thursday as retail sales jumped by 0.8% in May, twice as high as expected and Nasdaq hit fresh record high. It declined 0.1% on Friday as Trump enacted $50 billion tariffs on Chinese imports and manufacturing production fell 0.7% over month in May.

On the monetary front the interest rate decisions by the central banks of Switzerland and United Kingdom on Thursday are the most important events this week. Speeches by the heads of central banks of the United States, Europe and Japan will also be closely watched from Monday through Wednesday. And on commodity front the Organization of Petroleum Exporting Countries will meet on Friday to discuss a likely extension of crude oil output curbs.

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