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Interest rate talks move stock markets

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Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
Interest rates continued to rise globally after Fed officials leaned towards more aggressive decisions at upcoming monetary policy meetings.

The last to speak out in this regard was the head of the Chicago Fed, Charles Evans, who said that the Fed needs to raise interest rates "at the right time" this year and in 2023 to curb high inflation.

More and more investment banks are anticipating rate hikes of up to 2% for this year and above 2.5% for next year, as is the case with Bank of America. Morgan Stanley also forecasted a positive outlook for economic growth that counteracts the restrictive effect of monetary policy necessary to tackle inflation.

Stock markets continued to perform well despite Treasury bond yields rising, with the US 10-year bond reaching the 2.50% level, the highest since 2019.

DowJones30 added more than two weeks of consecutive gains, technically surpassing the 100 and 200-day moving averages and heading towards the next targets at 35,000 and 35,600.

The European stock markets have also had a positive performance along with their North American counterparts, even though Europe is the region most seriously affected by the conflict in Ukraine. However, the ECB's monetary policy of stimulus and the political decisions of the European Commission to abandon energy dependence on Russia is contributing to economic expectations not being so negative.

The German DAX index stopped gains over the last week, lagging behind the US indices rally. This could technically be a bullish flag that would anticipate new advances towards the pivot zone of 14,900, a level that would mark the turning point towards a market uptrend.

Sources: Bloomberg, Reuters.

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.