Powell’s testimony rocks US stocks and bonds… and Dow Jones loses 575 points
The words of Jerome Powell, Chairman of the Federal Reserve (US Central Bank), in his semi-annual testimony before a special Senate committee, were neither cold nor peace on US stocks and bonds, following he assured the markets that US interest rates would likely rise more than he expected from Before, he and his buddies went to the bank.
And before the head of the largest central bank in the world finished his testimony, the markets were interacting with it with full force, as bond yields rose very quickly, which means a drop in their prices, while stock prices began to decline, slowly at first, and then to accelerate their declines in the last moments of the session. , for the Dow Jones Industrial Average to lose nearly 575 points, erasing all its gains in the current year.
During trading on Tuesday, the three major US stock indices declined, as the Dow Jones Industrial Average lost 1.72% of its value, the S&P 500 index lost 1.53%, while the Nasdaq index lost 1.25%.
Powell said, on Tuesday, in his testimony regarding the country’s monetary policy, that the recent economic data “came in stronger than expected, indicating that the final level of interest rates is likely to be higher than previously expected.”
Dealers are currently likely to raise the interest rate at the twenty-second meeting of this month by half a percent, instead of a quarter that was widely expected, until the middle of last month.
Stocks, on the other side of the Atlantic, were not spared the repercussions of Powell’s testimony, as European stock indices fell at the end of the session, coinciding with the words of the Federal Reserve Chairman, despite the gains they witnessed at the beginning of the day.
The Stoxx 600 index fell by 0.77%, the British FTSE index fell by 0.13%, while the German DAX index fell by 0.6%, while the French CAC fell by 0.46%.
Mining stocks led the losses in the European Stock Exchange, following declining by 2.5%, while technology stocks fell by 1.8%.
Gold trading witnessed intense selling, following Powell’s references to higher interest rates, which represents an opportunity cost for precious metal investors. On Tuesday, the gold price fell by 1.8%, to record $1814.48 an ounce in the spot market.
For the first time in six sessions, oil prices witnessed a noticeable decline, on Tuesday, when dealings settled, as Brent crude futures fell by 3.4% to $83.29 a barrel, and US West Texas crude contracts fell by 3.6%, recording $77.58 a barrel.
And while OPEC Secretary-General Haitham Al-Ghais expected China to account for between 500,000 and 600,000 barrels per day of oil demand growth this year, Chinese data showed that Beijing’s imports of crude oil decreased by 1.3% in the first two months of this year compared to its level. a year ago.
The news of the decline in imports from China, the world’s largest oil importer, coincided with Powell’s words to members of the US Congress, to increase the possibility of a slowdown in the global economy, and thus a decline in demand for black gold.