- Market sentiment remains firmer amid hopes of Ukraine-Russia peace, easing covid woes in China.
- Fed matched 0.25% rate-hike expectations, also signalled six more such lifts.
- S&P 500 Futures print three-day uptrend, Nikkei pokes two-week high with +3.5% daily gains.
- US 10-year Treasury yields snap eight-day uptrend while easing from two-year high.
Although the Fed announced a hawkish hike the previous day, global markets keep the risk-on mood during Thursday’s Asian session. The reason could be linked to the upbeat headlines from Ukraine-Russia peace talks and receding virus woes in China, not to forget Beijing’s push for more economic measures.
While portraying the mood, S&P 500 Futures and Nikkei 225 poke two-week high while the US 10-year Treasury yields drop for the first time in nine days.
That said, S&P 500 Futures rise 0.10% daily around 4,365 whereas Nikkei 225 prints 3.60% intraday gains while picking up bids around 26,660. Further, the US 10-year Treasury yields decline 3.5 basis points (bps) to 2.15% while reversing from the highest levels since May 2019.
Talking about the main catalysts, Kyiv’s rejection of proposed neutrality in the 15-point peace plan and the International Court of Justice’s order to Russia to suspend the invasion of Ukraine challenge sentiment but the continuation of talks and recently easy tone of Moscow keeps markets hopeful.
It should be noted that China reported a second day of easy covid numbers after refreshing the record numbers during the weekend. “China reports 1,317 confirmed COVID cases on March 16 versus 1,952 a day earlier,” per Reuters. Additionally, China Vice Premier Liu He’s push for the measures to boost the economy in the first quarter (Q1) also keeps the risk-appetite firmer.
Alternatively, Fed’s 0.25% rate hike and expectations of seven more such rate lifts during 2022, coupled with upwardly revised inflation forecast, should have challenged the market sentiment but Fed Chairman Jerome Powell’s comments defend the optimists.
Having witnessed the Fed-rate-hike and its market reaction, investors will pay attention to today’s Bank of England (BOE) interest rate announcement with hopes of a 0.25% rate hike. Also important will be the headlines concerning Ukraine-Russia peace talks and the second-tier US data.