Europe In The Red, U.S. Equities Climb
It is a mixed day in the markets as European indices slip a little into the red, while Wall Street is enjoying returns of more than 1% on Tuesday.
U.S. equities are managing decent gains even as yields continue to head higher and traders are forced to consider the possibility of 75-basis-point increases, something not seen in almost three decades.
That is what James Bullard has indicated, although even he – one of the more hawkish members of the FOMC – acknowledged that is not his base case at the moment. Still, the prospect of even more aggressive tightening can’t sit well with investors, despite the resilience they’ve shown in recent months.
It’s been a turbulent few months for stock markets, what with investors facing the prospect of higher inflation, faster rate hikes, lower growth and a prolonged war in Ukraine. And yet, as we navigate through the early stages of first-quarter earnings season, we’re continuing to see the kind of resilience we often associate with stock markets, particularly those in the U.S.
And it comes as organizations like the IMF and World Bank lower growth and raise inflation forecasts for this year and next. Naturally, some countries are coming off worse than others, with the UK situation looking particularly bleak.
And with Russia intensifying its attacks and talks appear to have hit a brick wall, the prospect of a ceasefire being agreed upon looks increasingly unlikely any time soon. That should keep commodity prices high and further fuel inflation and interest rate concerns. The cost-of-living crisis is only going to get worse, it seems.
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