The stock market lost some of its early gains after the latest Fed meeting minutes came out. The Federal Reserve Chair, Jerome Powell, is in charge of the Federal Open Market Committee. He wrote in the minutes of the December meeting released on Wednesday that all of the policymakers agreed that “unacceptably high” inflation would need a long period of restrictive policy.
This indeed means what traders thought – higher rates for longer. Those who were looking for signs of a change were disappointed because central bankers have kept their “hawkish” tone.
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Main indices traded like a roller coaster. Gains, corrections and gains again. Nasdaq came back and gained 0.8%. JD.com was one of the best performers, with a rise of more than 14% up. The S&P 500 index closed a 0.7% green gain.
The sectors of the S&P 500 were a mix. The best ones were real estate and materials and the most damage was done to energy and technology (again). Tesla Inc. went up almost 5% after falling 12% the day before. Microsoft, on the other hand, went down about 5% after UBS downgraded the stock from buy to neutral.
Dollar retreats and loses all across the board
On Wednesday, the US dollar changed direction and went sharply down across the board. But the losses were not all the same. The Aussie was one of the currencies that did best, while the EUR was at the bottom of the list.
In fact, the first thing that caused the US dollar to drop was news from China that affected Australia. After two years of conflict, the news said that the Chinese National Development and Reform Commission talked about plans to partially lift the ban on Australian coal imports.
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Imports stopped in the middle of 2020, when Australia and other countries started looking into where Covid came from. This made China angry, so it banned a number of Australian products. Market talk says that coal imports could start again as soon as April 1st.
The dollar index was down 0.27% at 104.25. On Tuesday, it hit a high of 104.86, which was the highest level in two weeks. EUR/USD as the least green closed up 0.57%. AUD/USD closed 1% greener with 1.58% at 0.6840. USD/JPY however enjoyed a gain of 1.28%
Global economic fears are supercharging oils decline
US West Texas Intermediate crude for delivery in February sounded the bell down $4.09, or 5.3%, at $72.84 per barrel. WTI hit a three-week low of $72.77 earlier. The price of WTI, which is the standard for US crude oil, has dropped almost 10% in just two days of trading since the start of 2023. At the end of 2022, WTI was up almost 7%.
Brent crude from the UK for February delivery ended the day down $4.26, or 5.2%, at $77.84 per barrel. After finishing last year up 10.5%, Brent is down 9.4% in just two days of trading this year.
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The yield on the 10-year Treasury note that is used as a standard fell 9 basis points to 3.71%. Gold and Silver futures were not working together on Wednesday. Gold enjoined gains with 0.79% up while silver got sold 1.3% to the red.
The price of Henry Hub’s February gas settled at $4.172 per mmBtu, or metric million British thermal units. This was an increase of 18.40 cents, or 4.6%, from the day before.