Stocks tread water after shock over Powell rate warning / Photo: © AFP/File
Stocks tread water after shock over Powell rate warning
Stock markets sputtered on Wednesday after Federal Reserve chief Jerome Powell triggered a rout by warning that higher interest rate hikes might be needed to tame stubborn inflation.
Wall Street's main indices were flat in early trading after the opening while European markets were mixed.
Asian indices mostly ended lower after Powell on Tuesday dealt a hammer blow to faint hopes that the US central bank could pause its rate tightening soon.
Powell told US lawmakers that the "ultimate level of interest rates is likely to be higher than previously anticipated" as economic data has come in stronger than expected.
Fresh data on Wednesday showed that US employers stepped up their pace of hiring in February -- another indication that more effort may be needed to cool the world's biggest economy.
Powell will address the Congress again on Wednesday.
European Central Bank president Christine Lagarde, whose institution has also been hiking rates to control inflation, made her own pledge on Wednesday to "do whatever it takes" to restore price stability.
"The stock market had the interest rate jitters yesterday and it has been slow to shake them off today," said Briefing.com analyst Patrick O'Hare.
"There is burgeoning concern that the continued rate hikes will indeed invite a recession down the road," O'Hare said. "The uncertainty for many is, just how far down the road might that be?"
Investors are now betting on the Fed to lift rates 50 basis points at its meeting this month.
That would be twice as much as its last gathering.
"Given the strength of recent data, the change of tone (by Powell) should not have been surprising," noted CMC Markets analyst Michael Hewson.
US inflation is running above six percent and while that is down from multi-decade peaks seen last year, it is still well above the bank's target of two percent.
Traders eagerly await US monthly jobs data due Friday.
Tokyo's stock market was another rare gainer Wednesday, with exporters profiting from a weaker yen.
The dollar pared back gains against the euro, pound and yen after hitting multi-month highs.
The oil market fell again Wednesday after tumbling more than three percent in the wake of Powell's comments.
A strong US currency weighs on dollar-denominated crude prices, which become more expensive for customers purchasing in other currencies.
- Key figures around 1445 GMT -
New York - Dow: FLAT at 32,847.66 points
London - FTSE 100: UP 0.2 percent at 7,934.58 points
Paris - CAC 40: DOWN 0.1 percent at 7,333.74
Frankfurt - DAX: UP 0.3 percent at 15,606.21
EURO STOXX 50: UP 0.2 percent at 4,286.84
Hong Kong - Hang Seng Index: DOWN 2.4 percent at 20,051.25 (close)
Tokyo - Nikkei 225: UP 0.5 percent at 28,444.19 (close)
Shanghai - Composite: DOWN 0.1 percent at 3,283.25 (close)
Euro/dollar: UP at $1.0562 from $1.0549 on Tuesday
Pound/dollar: UP at $1.1845 from $1.1830
Euro/pound: DOWN at 89.15 pence from 89.18 pence
Dollar/yen: DOWN at 136.75 yen from 137.16 yen
West Texas Intermediate: DOWN 1.4 percent at $76.52 per barrel
Brent North Sea crude: DOWN 1.0 percent at $82.46 per barrel
T.Ward--TNT
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