Equities: Fed focus and energy shock – Deutsche Bank
Deutsche Bank’s Henry Allen and colleagues note that the S&P 500 has retreated to a six‑week low as higher Oil prices and stagflation fears weigh on risk assets.
Deutsche Bank analysts reveal that the S&P 500 has plummeted to a six-week low due to increased oil prices and concerns about stagflation. Markets now anticipate a 94% chance of a Federal Reserve rate hike. Chair Jerome Powell’s guidance and the updated dot plot will be crucial in determining market direction. The S&P 500 (-0.45%) reached a 6-week low, while the Philly semiconductor index (+0.40%) showed slight improvement.
The decline was widespread, affecting two-thirds of the S&P 500. Europe experienced a similar decline, with the STOXX 600 (-0.28%) hitting a 3-month low. Despite this, the S&P 500 remains within 3% of its all-time high, and the STOXX 600 is less than 4% below its peak. Asian markets started stabilizing after oil prices dropped, with the KOSPI (+1.16%), Nikkei (+0.40%), Shanghai Composite (+0.50%), CSI 300 (+0.60%), and Hang Seng (+0.12%) all gaining.
US equity futures also indicated a positive opening, with S&P 500 futures up +0.22% and the 10-year Treasury yield falling by 1.6 basis points to 4.99%. The Australian Dollar (AUD/USD) remains bearish, near a monthly low, due to rising US bond yields and Middle East tensions strengthening the US Dollar. Gold maintains modest gains but stays below $4,350 amid cautious investor sentiment leading up to the Fed decision and Bank of Japan meeting.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
