Getting inflation under control will not be easy; Powell does not promise a soft landing for the economy.
Everything is about inflation, economic growth, and the central bank's decisions. Investors are looking after any sign to find the following policies and how the central banks will react to the current situation.
Yesterday, Mr. Powell had a meaningful comment saying that it would not be easy to control inflation. He can not promise about soft landing for the economy, which some other FED members have repeatedly told. These risks put more pressure on riskier assets such as Cryptocurrencies and tech stocks in the last few days.
While economic risks are getting more prominent and do not let anything hide, on the last day of this trading week, so far in Asia, the Nikkei 225 in Japan traded 2.7% higher, and the Hang Seng index jumped 2.1%, Shanghai Composite up 0.6%. In comparison, the Shenzhen Component gained 0.2%.
Last night, on Wall Street, the S&P 500 declined 0.13% to close more than 18% lower than its all-time high. The Dow Jones Industrial Average lost 0.33%, but the tech-heavy Nasdaq Composite advanced fractionally to 11,370.96, or 0.6%.
Despite these advances, global stocks are about 18-month lows on worries about persistently high inflation and aggressive reaction by central banks. Even though last night FED chair Powell in his interview, did not go future and talked about earlier mentioned 50bp rate hikes to give some hopes, still overall sentiment is not in favor of the leading players in the financial markets.
Whit looking at all these movements in the market, some correction would be the natural reaction, especially on Friday! On the other hand, short-term buy orders in deep can also be activated and pause the bears for a while, but how strong these supports will be is unclear. Things about the Nikkei in Japan are slightly different from what we can see on Wall Street due to BOJ's dovish monetary policies, which help slow down the bears' movements.
From the technical point of view, Nikkei 225 has a pivot point at 20-DMA at 26,675, in its range movements between 26,00 and 28,000. Any breakout from this range would signal the next trend for JP225. Technically, the MACD's histograms are created under 0-line with market volume a bit more than its 20-DMA, signaling that overall it is bearish, but could be limited.
