Asian Stocks Set for Weakness, Powell Holds Back Signal
Asian stock markets are expected to open lower on Wednesday (September 24th), following a decline in major technology stocks on Wall Street that halted the S&P 500's three-day rally. Investors are also still unsure about the direction of interest rate policy following comments by Fed Chairman Jerome Powell, who appeared cautious and did not provide a firm signal of further rate cuts.
Powell emphasized that risks remain in the labor market and inflation, so the central bank must be cautious before cutting interest rates more aggressively. Although the Fed just cut its benchmark interest rate by 25 basis points last week and projected two more cuts this year, Powell chose to maintain flexibility. "Powell didn't sound hawkish, but he also didn't want to appear to bow to political pressure," said TradeStation analyst David Russell.
On Wall Street, megacap technology stocks fell 1.6%, dragging the S&P 500 slightly lower even as most other stocks rose. Meanwhile, the 10-year US Treasury yield fell to 4.11%, the dollar fluctuated, and gold prices remained at record highs. Oil prices also continued to rise amid concerns about Russian supply due to the Ukraine attack and tensions with NATO.
Despite monetary policy uncertainty, market optimism remains buoyed by the prospect of further interest rate cuts, solid corporate earnings growth, and euphoria around technology stocks capitalizing on the artificial intelligence trend. The S&P 500 is now trading nearly 3% above analysts' average year-end projections, indicating the bullish trend remains strong, although the risk of a short-term correction remains. (ads)
Source: Bloomberg.com
