[U.S. market]Stocks continue to fall, avoid risk before Mr. Powell’s remarks – Temporary 132.90 yen – Bloomberg

In the US stock market on the 6th, the S & P 500 stock index continues to fall. Amid growing speculation that the Fed will continue its tightening policy, there was a growing mood to see if Fed Chairman Jerome Powell would rein in the market’s bullish stance.

The yen weakened further against the dollar as news reports on the appointment of the next governor of the Bank of Japan continued to be a source of concern. At one point, the dollar fell 1.3% to ¥132.90.

Major stock indices have left overbought levels. Powell is expected to reiterate at Wednesday’s event that market expectations for a rate cut this year are likely to be wrong.

“Chairman Powell continues to be a huge uncertainty with every word he speaks,” said Chris Senick, chief investment strategist at Wolf Research. “Investors will be watching to see if we correct the very dovish tone,” the chairman said at a post-FOMC press conference on Wednesday. ‘is underway’ and perceptions of the financial environment.We still believe the Fed will keep the policy rate ‘higher and longer’.”

Geopolitical concerns are also smoldering. Indexes of U.S.-listed Chinese stocks fell on the day as tensions mounted after the Biden administration shot down a Chinese balloon by U.S. forces. The U.S. is preparing to impose a 200% tariff on Russian aluminum as soon as this week, according to people familiar with the matter.

US imposes 200% tariffs on Russian aluminum as early as this week

Investor sentiment was also weighed on by falling shares of tech giants such as Apple Inc., Amazon.com Inc. and Google parent Alphabet Inc., which reported earnings last week.

“Major stock indices reached overbought territory after a strong January rally,” said Matt Maley, chief market strategist at Miller Tabak. “We’re not trying to say that after a short-term selloff, we’ll see another strong rally. In fact, we see a short-term drop that will probably lead to further losses,” he said.

After a year-to-date gain, the S&P 500 is now at a level that correctly reflects better-than-expected economic growth and lower bond yields, strategists led by Goldman Sachs Group Inc. David Kostin said in a note. At the same time, high valuations, poor corporate earnings and high interest rates mean there is little upside from here.

US stocks rally is over for the year, says Goldman’s Kostin

US Treasuries

The US Treasury market continues to fall (yields rise). It was the development that mainly short-maturity government bonds were sold.

It was affected by the sell-off of core government bonds in the European bond market. European Central Bank (ECB) and Bank of England (BoE) officials stressed the need for further interest rate hikes, leading to the selling of government bonds.

foreign exchange

The dollar rises in the foreign exchange market. It was the biggest three-day high since at least September last year. The rise in U.S. Treasury yields and heightened tensions between the U.S. and China. The yen fell further against the dollar. Some reports that the government has sounded out the appointment of Masayoshi Amemiya as Deputy Governor to succeed Haruhiko Kuroda, Governor of the Bank of Japan, continue to be a source of material.

But analysts at Mitsubishi UFJ Financial Group Inc. said they expect the BOJ to change policy in the coming months, citing rising inflation in Japan. “Regardless of who is elected as the next governor, we expect the BOJ to abandon yield curve control (YCC), which should encourage further yen appreciation over the next year. ’” analyzed in the report. The recent selling of the yen is “only a temporary drop”, and the dollar is expected to fall against the yen and reach the low 120 yen level to the dollar.

Bloomberg’s dollar index rose 0.8% at one point, its highest level since January 9. It rose about 2.3% over the past three trading days.

Bipan Lai, head of foreign exchange strategy at the Canadian Imperial Bank of Commerce (CIBC), said of the Chinese balloon that was shot down over the US mainland: ,” said it was a serious matter.

crude

New York crude oil futures rebounded for the first time in four business days. After temporarily dropping to the lowest level since early December and technical indicators suggesting overselling, the stock recovered.

Against the backdrop of an increase in crude oil inventories, market sentiment is likely to deteriorate. On the other hand, the selling was restrained after the technical indicator reached a level that suggested oversold.

“We can be as bullish as possible based on a lot of positive stuff,” said Vikas Dwibedi, global oil and gas strategist at Macquarie. “Now it’s a battle of the two,” he said.

West Texas Intermediate (WTI) futures for March delivery on the New York Mercantile Exchange (NYMEX) rose 72 cents, or 1 percent, to $74.11 a barrel. London ICE North Sea Brent April delivery rose $1.05, or 1.3%, to $80.99.

Money

The New York gold futures market rebounded slightly. Gold sold off last weekend as stronger-than-expected US jobs data dampened optimism that the Fed would turn hawkish this year.

“The surprisingly strong U.S. jobs report merges with earlier signs that the labor market is holding up much better than most expected,” BMO Capital Markets analyst Colin Hamilton said in an emailed note. . “The reassessment of interest rate forecasts, along with a stronger dollar, weighed on precious metals in general,” he continued.

Gold futures for April delivery on the New York Mercantile Exchange (COMEX) rose $2.90, or 0.2%, to close at $1,879.50 an ounce. The spot price rose 0.1% to $1,867.11 as of 2:48 pm New York time.

Original title:Stock Euphoria Deflated With Powell as ‘Wild Card’: Markets Wrap(excerpt)