The Ukrainian-Russian war has triggered a panic in global markets, but U.S. stocks have shown amazing resilience. Analysts believe that compared with Russian President Vladimir Putin, Wall Street is more worried regarding Fed Chairman Powell because of inflation and the Fed’s reaction to this event. , is still the biggest risk to the market.
Recent data showed U.S. economic demand remained strong enough to keep inflation at an uncomfortably high level. The U.S. Commerce Department said on Friday that the U.S. core personal consumption expenditures (PCE) price index rose 5.2% year-on-year in January, slightly higher than market expectations. The Fed’s preferred measure of inflation was at its highest level since April 1983 at 5.1%.
Analysts believe that Thursday’s surprising reversal in U.S. stocks may suggest that investors are starting to put the Ukraine-Russia issue aside, judging that geopolitics will not have a lasting impact on the market, so the Federal Reserve’s tightening monetary policy has attracted attention.
Brad McMillan, chief investment officer at Commonwealth Financial Network, said: “A rate hike usually means a drop in valuations. Since the end of 2021, the projected price-to-earnings ratio for the S&P 500 has fallen sharply, which is largely explained by the fact that rate hikes have swayed the market. Tends to sell, and now add the Ukrainian-Russian war.Wall Street seems to be far more worried regarding Ball than Putin, at least for now.」
In fact, the Fed policy is the focus of almost all discussions regarding the market trend. Whether the Fed can successfully curb soaring inflation or whether Western countries will impose oil sanctions on Russia has become the focus of attention. International crude oil prices once exceeded 100 per barrel on Thursday Dollarfell as the White House confirmed that there would be no future oil sanctions on Russia.
Yahoo Finance columnist Rick Newman wrote in an analysis that the Ukrainian-Russian war will inevitably exacerbate price pressures. The Ukrainian-Russian conflict has compounded the growth outlook, meaning investors cannot completely rule out a more dovish stance when the Federal Reserve meets next month.
People’s United Advisors chief investment officer John Traynor believes that the Ukraine-Russia crisis will make the Fed more thoughtful in raising interest rates, and the pace will be slightly slower, and the market trend is still related to the Fed.
Goldman Sachs said the current situation is different from the past, where geopolitical events have caused the Fed to delay or ease its tightening policy, as inflation risks create a more pressing reason for the Fed to tighten policy now than in the past.
Goldman Sachs expects geopolitical risks will not prevent the Federal Open Market Committee (FOMC) from raising interest rates by a steady 25 basis points at its upcoming meeting, while geopolitical uncertainty will further reduce the Fed’s 50 basis point rate hike next month. possibility.
