U.S. indices wobble following Powell comments
U.S. indices initially were trading lower in today’s session, following comments from Fed Chair Powell, before turning positive for much of the day until finishing slightly down at the close.
During the first of his two days of testimony, Powell stated that, “The American economy is very strong and well positioned to handle tighter monetary policy”.
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Powell was justifying the recent rate hikes from the Fed which has seen the bank boost rates for the past three months.
He went on to add that, “At the Fed, we understand the hardship high inflation is causing. We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so”.
At the close the S&P 500 was marginally lower finishing down 0.13%.
Oil price drop to lowest level in 6-weeks
WTI crude was trading lower on Wednesday, as markets reacted to news that President Biden is set to ask for a halt to oil taxes.
On Wednesday, it was rumoured that Biden was set to ask Congress to suspend oil taxes of 18.4 cents per gallon for a period of three months.
Although lowering prices could boost demand, markets believe this could coincide with the U.S. further tapping into its reserves to boost supply.
Biden also hopes that by lowering costs, this could potentially help with slowing down the rate of inflation.
Crude fell to a low of $103 per barrel on the news, then recovered somewhat to $105.75.
UK inflation hit 40-year high
In the United Kingdom, inflation rose to its highest level in over forty years, led by rising energy prices.
Data released on Wednesday showed that the country’s consumer price index rose by 9.1% last month.
Today’s figure was in line with market’s expectations, and 0.1% higher than April’s reading.
The bank of England increased interest rates for a fifth consecutive month last week, with some expecting even more hikes.
London’s FTSE 100 closed nearly 1% lower on the news.
“Remember that stocks are never too high for you to begin buying or too low to begin selling.”-Jesse Livermore.