Market Wrap – Chair Powell Testimony

Markets remained in a bearish mood due to concerns over the global economy and also the ongoing Semi-annual testimony from Federal Reserve Chair Powell speaking before congress.

It was a third straight day of losses for European stock markets, with the Stoxx 600 losing around -0.5% and the German DAX declined by-0.6% on the day.

Elsewhere, the UK FTSE 100 declined by -0.1% and the Italy MIB flatlined around 0.0%. In Europe, the Spanish IBEX was flat at 0.0% and the French CAC lost-0.6%.

In the FX market a recovery was underway as the EURUSD pair traded back towards the 1.0950 area, and the GBPUSD attempted to claw back earlier losses after falling towards 1.2700.

Chair Powell during his Q&A session answered a notable of questions on inflation and the economy and he said that the “Level for rates and speed of hikes are separate.”

Commented on rate hikes he noted that “It may make sense to move rates higher, at more moderate pace” and the “Fed is now moderating the pace of rate hikes.”

Talking about regulation he noted that “banking regulation should be transparent, consistent not too volatile” and that “capital is central to banking regulation.”

Chair Powell also highlights lower quits and falling job openings as signs of looser labour market and said that the dollar‘s status as the global reserve currency is very important.

Federal Reserve member Cook was also on the worse during the US session, he noted that “We’re not there yet on getting inflation back to target.”