• December 6, 2021

ASX braces for gains as Fed chief calms markets

Wall Street rallied to close the week, pushing the S&P and Nasdaq to record closing highs, as remarks by US Federal Reserve Chairman Jerome Powell at the Jackson Hole Symposium quelled fears about the reduction schedule and sent investors to the weekend with a buying spirit.

All three indices posted weekly gains.

Jerome Powell failed to provide a clearer picture of when the central bank cut asset purchases or raised interest rates, the key elements of its dovish monetary policy aimed at helping the economy recover from the pandemic recession. .Credit:AP

“I see two things happening,” said Mike Zigmont, head of research and trading at Harvest Volatility Management in New York. “I see a thoughtful buy-dip validation and I see that the market is embracing a dovish Fed.”

Regarding the recent series of all-time highs for the indices, including the 52nd record close of the S&P 500 so far this year, Zigmont said that “the march north has been very consistent. The reductions are super superficial and the recoveries are very fast. “

It sets the Australian equity market for gains this morning, with futures targeting a 13-point gain, or 0.2 percent, at the open.

In his prepared remarks, Powell fell short of providing a clearer picture of when the central bank cut asset purchases or raised interest rates, the key elements of its dovish monetary policy aimed at helping the economy recover. from the pandemic recession.

In fact, Powell appeared to have a more subdued tone than other Federal Open Market Committee (FOMC) officials, including St. Louis Fed Chairman James Bullard and Cleveland Fed Chairman Loretta Mester, who they said earlier that day that they expect the phase-down process to begin. soon and relax next year.

“The market is very happy that the Fed is pumping more liquidity into the economy every month,” Zigmont added. “The Fed is allowing asset prices to go up and the market is happy with that.”

Economic data released on Friday yielded, in large part, precisely what economists expected: a pullback in spending and consumer sentiment due to the COVID-19 Delta variant, and signs that the current wave of price spikes will not. it will turn into inflation in the long run. in accordance with the guarantees of the Fed.

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