Markets whipsawed, needed time to digest the fed’s hawkish comments

Updated time: 07 Feb, 2022, 06:28 (UTC+04:00)

Recently happening events - mixed corporate earnings, the hawkish Fed and central banks, as well as geopolitical conflicts have put the market and investors’ mood in stronger uncertainty and volatility. While the FOMC statement on Wednesday mentioned key interest rates near zero, the Fed hinted at more rate hikes this year, faster than expected and beginning the first in March. As a result, the fed funds futures market priced in nearly five hikes, or more.

Markets whipsawed, needed time to digest the fed’s hawkish comments

Major and small indexes failed to hold intraday slight gains despite a boost in Apple’s better-than-expected earnings. Global shares have lost $7 trillion in January to date. On the contrary, Asia Pacific stocks were mostly up, led by Japan’s Nikki 225 with a 2.04% jump, but trading was somewhat subdued ahead of the upcoming Lunar New Year Tet holidays.

The dollar has been on cycle highs, today headed straight after breaking through levels against the euro and the yuan. The yen, the aussie and the kiwi all dropped. Some predicted the dollar’s surge may lose steam after the next week’s meeting of the ECB and RBA.

Oil still rallied, set for the sixth week gain amid tight supplies but rising demand. Gold was up for a while but then turned back to drop as the Fed impacts still existed. 2022 is said to be a challenging year for gold.

At this time, crypto recovered a bit: Bitcoin stood at $37,320 and Ethereum $2,445. However, since a strengthening dollar means bearish for the coins, it may be too soon to see bulls replacing bears, especially when the market was trying to digest the Fed’s hawkish comments.

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