Overnight Market Wrap: 24 August 2022

Overnight Market Wrap: 24 August 2022

Key Points:

  • Stocks Dip, Dollar Rises as Fed Path Stirs Caution
  • Global slump in business activity darkens economic prospects
  • Fed’s Kashkari says it is ‘very clear’ Fed must tighten policy

An Asian stock index dipped and the dollar climbed Wednesday as investors assessed the likely pace of Federal Reserve monetary tightening and mounting signs of an economic slowdown.

Bourses in Japan and Hong Kong fell while China was mixed. US futures retreated after the S&P 500 and Nasdaq 100 posted small losses.

A dollar gauge pushed higher and risk-sensitive currencies such as those in Australia and New Zealand slid. Treasuries were little changed, leaving the US 10-year rate above 3%. 

The latest data showed economic activity weakening from the US to Europe and Asia, underlining the delicate task the Fed faces in hiking interest rates to bring down high inflation without sparking a recession.

Goldman Sachs Group Inc. Chief Economist Jan Hatzius said he expects Powell to lay out a case for slower increase. Federal Reserve Bank of Minneapolis President Neel Kashkari said inflation is very high and the central bank must act to bring it under control.

In China, drought and power shortages are compounding challenges from a property crisis and Covid curbs.

Elsewhere, crude oil held gains near $94 a barrel, bolstered by shrinking US crude stockpiles and possible OPEC+ output cuts.

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