SHANGHAI, Feb 2 —This is a roundup of global macroeconomic news last night and what is expected today.
The dollar extended losses on Wednesday and fell to a nine-month low against a basket of currencies after Federal Reserve Chair Jerome Powell spoke of making progress in bringing down inflation pressures, even as the U.S. central bank warned of further monetary policy tightening.
Powell, speaking in a news conference after the Fed announced that it had hiked rates by a widely expected 25 basis points, said he is not fully sure where the central bank will stop with its increases to borrowing costs as it presses forward with its efforts to cool inflation.
He also noted progress on disinflation, which he said is in its early stages, and said the Fed will continue to make decisions on a meeting-by-meeting basis.
Investors have been pricing in a more dovish outlook than Fed officials have been signaling as they bet that tighter monetary conditions will dent growth and possibly send the U.S. economy into a recession, and in turn lead the U.S. central bank to pivot to rate cuts.
Fed funds futures traders expect the benchmark overnight interest rate to peak at 4.89% in June, before falling back to 4.39% by December. The Fed’s last “dot plot” in December showed that Fed officials expected the rate to rise above 5%.
S&P 500 futures advanced Wednesday night as investors looked beyond the latest interest rate hike and commentary from the Federal Reserve.
Futures tied to the broad index added 0.4%. Nasdaq 100 futures gained 1%, helped by Meta shares. Futures connected to the Dow Jones Industrial Average ticked down 9 points, near flat.
The moves follow a positive day for the three major indexes. The S&P 500 reversed losses to end the regular session with a jump of 1.05%, while the Nasdaq Composite closed 2% higher. Meanwhile, the Dow eked out a narrow 0.02% gain after dropping more than 500 points earlier in the day.
Oil prices settled lower on Wednesday after sliding more than $3 a barrel in the session after U.S. government data showed big builds in crude oil, gasoline and distillate inventories and OPEC and its allies stuck to their output policy.
Brent crude futures settled down $2.62, or 3.1%, at $82.84 a barrel while West Texas Intermediate (WTI) U.S. crude futures fell $2.46, or 3.1% to settle at $76.41.
U.S. crude oil and fuel inventories rose last week to their highest levels since June 2021, the Energy Information Administration said, as demand remained weak.
Gold prices rebounded sharply on Wednesday as the Federal Reserve chief’s surprisingly dovish remarks on the central bank’s fight to bring down inflation sank the dollar and signaled to investors that a peak in interest rates was likely approaching.
Spot gold climbed 1.2% to $1,951.43 per ounce by 3:48 p.m. ET, its highest since mid-April 2022.
European markets closed lower Wednesday, with investors keeping a close eye on the U.S. Federal Reserve’s next monetary policy decision later today.
The pan-European Stoxx 600 index ended the day flat as the announcement loomed.
