Wednesday, 24 February 2021
Asian equities opened lower on Wednesday on concerns about rising interest rates and rich equity valuations and following a downdraft in U.S. and European overnight trading.
The Dow and S&P 500 recouped early losses after Federal Reserve Chair Jerome Powell reiterated in testimony before the Senate Banking Committee that monetary policy would remain accommodative and would not change without advance warning.
The tech-heavy Nasdaq index closed down 0.5% as investors sold the big tech stocks that have driven the market rally since last March, and rotated into cyclicals, helping lift the Dow and S&P 500.
But Powell's testimony hasn't fully swept away fears of rising inflation as the economies around the world are expected to rebound this year more strongly than was expected just weeks go as vaccines roll out around the world.
"Despite reassuring words from Mr Powell markets know that if the U.S. inflation ... hits over 2%, then the Fed will have difficulty in maintaining its support for economies and markets", said Michael McCarthy, Chief Markets Strategist at CMC Markets in Sydney.