Jerome Powell hints at slower pace of rate hikes
Jerome Powell sparked a rally in US equities overnight after the Fed chair hinted the pace of US rate hikes could soon slow. Powell’s comments increased hopes of a ‘pivot’ in policy which would see financial conditions ease.
“Comments from the Fed chair might have suggested a slight breather from the pace of hikes we’ve seen more recently, but there were clear warnings that the Fed was committed to returning inflation to levels akin to longer term targets,” said Matt Britzman, Equity Analyst at Hargreaves Lansdown.
FTSE 100 gains
The optimism in US equities spilled over into the European session and the FTSE 100 rallied with European equities.
China economic reopening
Adding to trader’s optimism on Thursday was the prospect of the Chinese economy reopening. Reuters reported their sources told them the government were preparing changes to their Zero-COVID policy after a week of unrest. Chinese equities gained, as did the FTSE 100’s cyclical stocks.
UK house prices slide
UK house prices slid 1.4% month-on-month in October, the biggest drop since June 2020.
“The carnage wrought by the mini-budget may have tipped the property market over the edge. The delay in sales being completed means this is just a first glimpse of the horrors that may lie ahead, and it’s looking like the next few months could be something of a nightmare. Prices fell 1.4% in November, their biggest monthly drop in two and a half years,” said Sarah Coles, senior personal finance analyst, Hargreaves Lansdown.
The dollar falls
The dollar was weaker following the Federal Reserve Chair’s comments with GBP/USD approaching the highest level since early August and EUR/USD traders eyeing July highs.