Mixed feelings continued to trail the stock market today despite recent gains in the US stock futures. This is a result of impending US monetary policies, geopolitical tensions, and wrangling over stimulus packages.
Note that the mark US ten-year Treasury yield rose by 1.85% to gain 2.5 bps after it dwindled from a 2-year height of 1.9%. Also, the S&P 500 futures rose by 0.2% to gain 4,533 even though the benchmark at Wall Street ended with a soft landing on Wednesday.
The Faceoff With China
President Joe Biden expressed the Chief Trade Negotiator Katherine Tai’s role in calming the China-US trade crisis. But he stated clearly that the US is not ready on the possibilities of reducing tariffs on Chinese imports. President Biden took note to mention that the Chinese are not meeting their purchase commitments.
Likewise, the various sector supports in favor of the Federal Reserve’s Chairman, Jerome Powell’s move to adjust the support system also raised worries over faster rate increase and normalizing the balance sheet, which on its own helps the US Treasury yields to previous losses.
It is noteworthy that President Biden’s caution to the Russian Federation and later hopes of retaining the backing of Senators Kyrsten Sinema and Joe Manchin for the Build Back Better plan on Friday’s first voting puts to test the investors and favored T-bond yields.
For that reason, the People’s Bank of China created a surprise in the markets by their first scaling down the five-year Loan Prime Rate by 4.6% to 5bps in about twenty-one months.
In New Zealand, the tougher Aussie jobs report and the country’s careful optimism in the leadoff to seeing the Omicron variant kept investors and sellers a little positive on Thursday’s Asian session.
Going ahead, recent realities over the China-US emergency and the Fed’s updates, alongside geopolitical situations and the stimulus package impasse, all will be enough for traders to monitor while the Philadelphia Fed manufacturing survey for January, the American jobless claims are awaiting events.
Meanwhile, Wall Street major indicators ended on the downside on Wednesday as tech giant Nasdaq announced that it was in the middle of a correction following a different set of corporate earnings and as some traders worried about higher US Treasury yields and the Fed stricter monetary policies.
Nasdaq ended low by 10.7%, far from its November ending record, as stocks sold off into the market. A correction is necessary if an index closes at 10% or over, below its high record closing level.