The US Federal Reserve has been on an aggressive campaign to raise interest rates and its chairman Jerome Powell’s speech at the Jackson Hole gathering of global monetary policymakers made it clear that its fight against inflation is not over, Wall Street hopes. has dashed that the Fed may soon ease on higher interest rates.
US indices fell after Powell said the Fed would need to keep interest rates high enough to slow the economy for some time in its effort to contain inflation. Weak global cues may lead to temporary pause for market rally Indian stock marketAccording to analysts.
“Nifty started a correction last week after last six weeks of gains and this correction may continue in the coming week as sharp selloff followed by sharp selloff in the US market. Fed Chairman Jerome Powell, The direction of global markets will be the key factor this week while on the domestic front, India’s GDP numbers and August auto sales numbers will be the key factors. Apart from this, the market will also watch crude oil prices, dollar index and US bond yield.
The coming trading week is expected to be full of activity including India’s GDP growth rate and S&P Global Manufacturing PMI, the start of a new F&O series of September and August auto sales.
“More or less, Powell’s statements were exactly what the market was expecting. After an initial drop in US stock markets and increased yields, the movement reversed slightly, stabilizing the market and yields. We believe That makes incoming US economic data all the more important to chart future US Fed action,” said Naveen Kulkarni, chief investment officer at Axis Securities.
Aishwarya Dadhich, fund manager at Ambit Asset Management, said the only new insight from this speech was the Fed’s acceptance that economic growth may be compromised over inflation.
“Nevertheless, the market was already discounting this growth and was not expecting any reversal in its policy normalization stance any time soon. Following the Fed move, the RBI at its next MPC meeting was And the rate hike will likely happen before it is set to see. Impact on economic indicators. Indian market has largely discounted this hike by RBI and Fed. What matters now is rate hikes , thinning of the bloated balance sheets of central banks,” Dadhich said.
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