Markets struggle ahead of key US jobs data ~ EconomyLens.com

Hong Kong (AFP) – Equities were mixed on Thursday as investors try to assess the Federal Reserve’s plans for interest rates after boss Jerome Powell indicated they would start to come down this year.

Focus is also on the release of key US jobs data due Friday, following a positive set of figures showing the labour market remained healthy but appeared to be softening.

Gold and bitcoin were essentially flat after edging back from record highs earlier in the week.

In closely watched testimony before lawmakers Wednesday, Powell flagged progress on bringing inflation towards the Fed’s two percent goal and said borrowing costs could be lowered as a result.

He warned that the battle was far from over, while investors are eyeing a first move in June after their March hopes were scrubbed by a strong inflation report last month.

“If the economy evolves broadly as expected, it will likely be appropriate to begin dialling back policy restraint at some point this year,” he told the House Financial Services Committee. “But the economic outlook is uncertain, and ongoing progress toward our two percent inflation objective is not assured,” he added.

While prices have been tempered by the Fed’s decision to push rates to a two-decade high, officials have lined up to warn that cutting them too early could erase all their hard work.

The economy continuing to be in rude health has allowed them to maintain that line, and stocks have pushed higher as confidence appears to be returning.

Powell’s remarks saw all three main indexes rise on Wednesday, and Asian traders struggled to maintain the positive momentum.

Shanghai and Hong Kong fell even as data showed Chinese exports surged more than forecast in January-February, while Tokyo was weighed by a strong yen as investors ramp up bets on the Bank of Japan soon shifting away from its ultra-loose monetary policy.

Singapore, Manila and Wellington were also off.

Sydney, Seoul, Mumbai, Taipei, Jakarta and Bangkok rose, though.

London, Paris and Frankfurt all opened lower.

“Powell stuck to the script. The January inflation blip evidently hasn’t shifted the broader calculus much and Chair Powell did little to break from recent Fed commentary,” said National Australia Bank’s Taylor Nugent.

Jose Torres at Interactive Brokers added that “his positivity concerning the trajectory of inflation amidst confidence that the central bank’s current rate is likely at its peak is enough for market participants”.

Traders are also keeping an eye on a policy meeting of the European Central Bank later Thursday, which is not expected to see any movement but investors are hoping for some guidance.