The US Federal Reserve may raise interest rates more aggressively if inflation continues to accelerate

At the National Association of Business Economists conference, Fed Chairman Jerome Powell indicated that the central bank could be more aggressive in raising interest rates if inflation does not slow down. This means raising the interest rate by 0.5% instead of the standard 0.25%. The US stock market reacted negatively to such comments but partially managed to recover by the end of the day. By the close of trading yesterday, the Dow Jones index (US30) decreased by 0.58%, the S&P 500 index (US500) lost 0.04%, and the NASDAQ technology index (US100) fell by 0.40%. All three major indices closed the day with losses. According to the analytical houses, FOMC officials are now more concerned about high inflation than the economic slowdown or weakening labor market.

Investors have difficulty assessing prospects for economic growth and corporate profits amid high inflation, interest rate hikes by global central banks, Russia's invasion of Ukraine, and the new wave of COVID-19 in China.

During the fourth week, the conflict in Ukraine hardly subsides as hopes for a diplomatic solution to end the war fade. On Monday, President Joe Biden called Russian President Vladimir Putin a war criminal for his attacks on Ukraine and killing thousands of civilians and hundreds of children. Biden also warned that Russia plans to launch cyberattacks against the United States.

International rating agency S&P Global Ratings is revoking credit ratings of all Russian companies and organizations by April 15.

The main European indices were closed on the red territory on Monday. German DAX (DE30) was 0.60% lower, French CAC 40 (FR40) decreased by 0.57%, Spanish IBEX 35 (ES35) fell by 0.34%, and only British FTSE 100 (UK100) was an exception, showing a 0.51% increase. From the end of March 2022, the Russian branch of French bank BNP Paribas will cease servicing transactions of clients from Russia. The decision was made against the background of anti-Russian sanctions.

Oil prices could rise to $300 a barrel if the world completely abandons crude oil from Russia, Russian Deputy Prime Minister Alexander Novak said after it became known that the European Union was considering banning the purchase of Russian oil. Novak also does not believe that Europe can completely abandon Russian hydrocarbons because, in his opinion, there is nothing to replace Russian oil. However, if Russian oil is rejected, the country will diversify oil supplies from the West to the East by creating new supply chains. According to analysts, crude stocks are very low by historical standards, so any disruption in global supplies would significantly affect prices.

Asian stock indices were mostly down yesterday. Hong Kong's Hang Seng (HK50) ended the day with -0.89% and Australia's S&P/ASX 200 (AU200) decreased by 0.22%. The Japanese market was not traded due to the holidays. But Asian stock markets have been trading higher since the market opened today. The biggest gainer is the Australian ASX 200 index, which is highest for the last two months amid the background of Australian energy and mining companies' securities.

Main market quotes:

S&P 500 (F) (US500) 4,461.18 -1.94 (-0.043%)

Dow Jones (US30) 34,552.99 -201.94 (-0.58%)

DAX (DE40) 14,326.97 -86.12 (-0.60%)

FTSE 100 (UK100) 7,442.39 +37.66 (+0.51%)

USD Index 98.51 +0.28 (+0.28%)

• – Australia RBA Governor Lowe Speaks at 03:00 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 15:15 (GMT+2);
• – US FOMC Member Williams Speaks at 16:35 (GMT+2);
• – Switzerland SNB Chairman Thomas Jordan speaks at 17:15 (GMT+2);
• – US FOMC Member Daly’s Speaks at 20:00 (GMT+2);
• – US FOMC Member Mesters’s Speaks at 23:00 (GMT+2).

by JustMarkets, 2022.03.22

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.