August 28, 2022
1 min read

US stock down may likely to be negative for equity markets

Stock markets in the US ended the week sharply down following tough comments by the head of the country’s central bank, the Federal Reserve…reports Asian Lite News

Indian markets are also likely to react negatively on Monday to statements by the US Federal Reserve after US markets fell more than 3 per cent.

Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services said: “US Fed statements post the Jakson Hole symposium indicated the central bank’s strong commitment towards controlling inflation over growth. In cues for major central banks across the world, Fed Chair Jerome Powell said that inflation is likely to remain higher for longer period and thus require aggressive stance.

“This is likely to be negative for equity markets. The impact was clearly visible in US markets which fell more than 3 per cent. Indian markets are also likely to react negatively on Monday with increasing volatility over the next few days.”

Stock markets in the US ended the week sharply down following tough comments by the head of the country’s central bank, the Federal Reserve, the BBC reported.

The bank’s chairman, Jerome Powell, said the bank must continue to raise interest rates to stop inflation from becoming a permanent aspect of the US economy.

His words sent US stocks into a tailspin, with markets tumbling 3 per cent.

It comes as Americans are having to pay more for basic goods.

Inflation in the world’s largest economy is at a four-decade high, the BBC reported.

During a highly anticipated speech at a conference in Wyoming on Friday, Powell said the Federal Reserve would probably impose further interest rate hikes in the coming months and could keep them high “for some time”.

“Reducing inflation is likely to require a sustained period of below-trend growth,” he said at the meeting in Jackson Hole.

Investors are concerned that if economic growth falters, higher interest rates will increase the likelihood of a recession, the BBC reported.

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