Wall up with a look at Powell… but also Ukraine

Wall Street indexes are moving slightly higher in Wednesday’s meeting, for the first time this week, with investors drawing some boost from hopes that Ukraine and Russia will hold a second round of talks tonight after seven days of escalating Russian aggression. which has led Moscow to bomb even residential areas.

Investors are also watching rising oil prices, and are awaiting the submission of Federal Reserve Chairman Jerome Powell to the Capitol Hill Finance Committee amid new challenges posed by the Russian-Ukrainian war in the US Federal Reserve. monetary policy in order to curb galloping inflation.

On the board, the Dow Jones industrial average adds 254 points or 0.76% and moves to 33,549.11 points, the broader S&P 500 strengthens by 0.82% to 4,341.49 points, while the technology Nasdaq gains 0.54% at 13,606.14 points.

Today’s buying mood, amid continuing volatility, is fueled by reports that the Ukrainian and Russian delegations will meet tonight to negotiate a second termination of the war.

The Russian delegation has stated that it is ready to continue talks with Ukrainian officials, with an adviser to Ukrainian President Volodymyr Zelensky confirming, according to the Russian news agency TASS, confirming the arrival of the Ukrainian side.

At the same time, of course, Russia appears determined to thwart its plans for Ukraine and warns the West of serious consequences in the event of its involvement, with Russian Foreign Minister Sergei Lavrov threatening in his speech that a Third World War it will be nuclear and destructive.

Investors, however, are also watching developments in the energy market very closely, as the Russian-Ukrainian war and Western sanctions against Russia have pushed up oil and gas prices. In fact, oil continues its rally despite the decision of the International Energy Agency to release 60 million barrels from the strategic reserves of its member countries in order to cover any shortfalls in the restriction of Russian exports.

This is because at today’s meeting OPEC +, a group in which Russia also participates, did not succumb this time, in the light of new developments in Ukraine, to the pressures for faster growth of its production, insisting on the decision to increase by 400,000 barrels per day.

As for the Federal Reserve, according to the draft submission of Jerome Powell to the Financial Services Committee of the House of Representatives today, its head is expected to stress that the US Federal Reserve will proceed normally with its plans to raise interest rates. this month as part of an effort to curb inflation, although the Russian invasion of Ukraine makes the outlook for the economy particularly precarious.

In the text of his speech, Powell confirms the key position of the Fed in recent months, that the extremely tight conditions in the labor market and high inflation, justify the increase in interest rates.

“We expect it to be the right choice to raise interest rates at the next monetary policy meeting later this month,” Powell said. At the same time, he confirms that the Fed will launch later this year the reduction of its balance sheet from the level of 8.5 trillion. dollars that is today.

The head of the Fed, however, did not give more details on how far or how fast the central bank will proceed in tightening its policy in the coming months. He reiterated that Fed officials continue to expect inflation to begin to decline later this year, although he noted the spike in uncertainty over the war in Ukraine.

“The short-term impact on the US economy from the invasion of Ukraine and the war in the country, the sanctions and the events that follow, is still characterized by great uncertainty.”

“Developing the right monetary policy in this environment requires recognizing that the economy is evolving in unpredictable ways. We need to be flexible in our response to incoming data and evolving prospects,” he said.

Source: Capital

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