Markets avoid new chaos after Powell remarks

It was the news investors didn’t want to hear, but deep down had a sneaky suspicion would come. Hawkish comments yesterday from Federal Reserve chairman Jay Powell made it perfectly clear that US interest rates would keep going up, potentially faster and harder than markets had previously priced in.

The reaction was understandable – markets pulled back, the dollar jumped, and investors took a moment to digest the new landscape.

Russ Mould, investment director at AJ Bell, said: “In the grand scheme of things, a 1.5% pullback in the S&P 500 index was not disastrous. Interestingly, pre-market indicative prices show the main US indices moving higher on Wednesday, implying that we are not going to see another period of chaos.“Asian stocks reacted to Powell’s comments with a pullback across the main indices apart from the Nikkei, which pushed 0.5% ahead. UK stocks already had time to react to the Fed chair’s remarks before yesterday’s market close and on Wednesday the FTSE 100 only dipped 0.3%, with strength in the energy sector helping to prop up the index.”