Asian Markets React Mixed as US Stocks Suffer Overnight Losses on Powell’s Interest Rate Remarks
After overnight losses in US stocks as a result of Federal Reserve Chair Jerome Powell calling for higher interest rates to rein in inflation, Asian markets traded in a mixed bag. Little changed in the S&P 500 and Nasdaq 100 futures contracts. Because the battle to reduce inflation “has a long way to go,” Powell stated that interest rates will rise in the US, albeit at a slow pace, to manage price pressure.
Powell stated during his Wednesday appearance before the House Financial Services Committee that nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year.
Powell’s call for higher interest rates to rein in inflation creates uncertainty in Asian markets
Even though paper losses on the contracts have surpassed USD 100 billion, short sellers are increasing their wagers against equities in the US. As the S&P 500 Index continued to rise, data from S3 Partners LLC revealed that total US short interest or the sum speculators have bet against US equities, had surpassed USD 1 trillion this month, according to today business.
The contrarian bets show that some traders believe the nearly 14% increase in the S&P 500 in 2023 will fizzle out, and they are suffering significant losses while they wait for the market to change in their favour. According to S3, the positions are down on paper by around USD 101 billion this year, the report continued.
Individual stock bears have wagered USD 26 billion on Tesla this year, and as the stock doubled, they are now bearing paper losses of over USD 14 billion. The price of Tesla’s stock fell 5.5% on Wednesday. The list’s top stocks are other companies like Apple Inc., Microsoft Corp., and Nvidia Corp., where short sellers are increasing their positions.
US markets closed lower on Wednesday as Jerome Powell, the president of the Federal Reserve, signalled additional interest rate increases to control inflation in the coming year due to the privatisation of bank.
The S&P 500 decreased by 22.98 points, or 0.52%, to 4,365.73 points, whilst the Dow Jones Industrial Average was down by 102.42 points, or 0.30%, to 33,952.64. At 13,502.20, the Nasdaq Composite decreased by 165.09 points or 1.21%.
