Global markets add gains after Powell conference |  Financial newspaper

Wall Street investors had already factored it into their projections: the US Federal Reserve would raise interest rates by 75 basis points (bps). Once these expectations were confirmed, the market entered a phase of volatility where it moderated its gains and then raised bets as the close approached.

As the Fed’s Federal Open Market Committee reported in its statement, the decision to raise the interest rate by 75 basis points was made in an effort to “achieve the maximum number of jobs” with a long-term outlook of 2% inflation.

At the press conference that took place minutes after the announcement, Fed Chairman Jerome Powell indicated that a 50 bps or 75 bps hike seems “more likely” for the July meeting, and stressed that “we are not trying to cause a recession now”.

After the conference, major Wall Street indices made significant gains. The Nasdaq Composite closed the day up 2.50%, followed by the S&P 500 (1.46%) and the Dow Jones (1.00%). The latter two left behind five consecutive losing sessions.

Stock performance shows that while so-called “growth” stocks were the ones that stood out on the day, the energy sub-index of the S&P 500 fell 2.13% and was the only one in the series to close lower. red, which contrasts with the general trend so far this year.

“Risk assets picked up momentum after the Fed restored confidence that it is serious about fighting inflation, but that a steady stream of large-scale hikes would be unlikely,” Edward Moya said. , senior market analyst at Oanda.

In line with these trends, Yields on 10-year US Treasury bonds fell 18.9 basis points to 3.284%while the two-year note – sensitive to changes in interest rates – fell by 23.6 bp to 3.191%.

“The two-year Treasury yield has seen a massive decline, which means we are seeing a peak in returns,” Moya said.

On the local stock market, The S&P IPSA added to the overall rally after the Powell conference and broke out of negative territory to close 0.35% higher at 5,139.41 points. This is the third consecutive time that the local selective closes a rising session preceded by two days of losses.

The largest increases within IPSA were the shares of Bci (2.61%), SMU (2.40%) and Parque Arauco (2.27%), while at the other extreme were Copec (-2.74%). ), Cencoshopp (-0.77%) and Enel Chile (-0.53%).

Europe on the move

Across the Atlantic, stock markets were already closed when the Fed made its announcement. The pan-European Stoxx 600 ended up 1.42%, snapping a six-session losing streak.

Within the indicator, the travel and leisure sub-index (3.28%) leads the way, followed by insurance companies (2.68%) and technology companies (2.56%). On the other hand, energy is the only one of the 20 sub-indices to have recorded a drop (0.69%), in line with what happened later on the New York Stock Exchange.

Among European stock market indices Frankfurt’s DAX (1.36%), Paris’s CAC 40 (1.35%), Madrid’s IBEX 35 (1.34%) and London’s FTSE 100 (1.20%) were in the lead .

The European Central Bank (ECB) held an emergency meeting this morning where it decided to apply flexibility in the reinvestment of maturing repayments in the portfolio of bonds accumulated during the pandemic, which has stimulated shares of the Old Continent.

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