Wall Street Rises After Four Days, But Caution Prevails in Markets

On Wall Street, stock prices rose on Thursday after four days of decline, but trading remains unstable as it is expected that the U.S. central bank will continue to raise interest rates due to elevated inflation.

The Dow Jones increased by 0.33 percent to 33,153 points, while the S&P 500 rose by 0.53 percent to 4,012 points, and the Nasdaq index by 0.72 percent to 11,590 points. After a strong rise in January, the indices lost some of those gains in February as hopes faded that the U.S. central bank would soon end its cycle of interest rate hikes. Yesterday, the Dow Jones and S&P 500 indices rose, after four days of decline, but they fluctuated between positive and negative territory as investors remained uncertain.

All recent data indicates that the economy is very resilient to the Fed’s aggressive interest rate hikes, which means that inflationary pressures could remain elevated for a longer period than the market expected.

It was announced yesterday that in the fourth quarter of last year, the U.S. gross domestic product (GDP) grew by 2.7 percent, slightly below analysts’ expectations, but still solid. It was also reported that last week, the number of initial claims for unemployment benefits unexpectedly fell, indicating that the labor market remains strong. This supports inflation.

As a result, it is estimated that the Fed will raise interest rates at least two or three more times, to 5.35 percent by July, and that these levels of interest rates will be maintained until next year.

On most European exchanges, stock prices also rose yesterday. However, the London FTSE index weakened by 0.29 percent to 7,907 points, while the Frankfurt DAX strengthened by 0.49 percent to 15,475 points, and the Paris CAC by 0.25 percent to 7,317 points.

Asian markets are trading cautiously as there are not many reasons to buy stocks, given the expected further interest rate increases. The MSCI index for the Asia-Pacific region, excluding Japan, was down 0.2 percent around 7:00 AM, on track for a weekly loss of about 1.5 percent. This morning, the Japanese Nikkei index rose by 1.3 percent, and stock prices in Australia increased by 0.3 percent. In Shanghai, South Korea, and Hong Kong, however, they fell between 0.4 and 1.3 percent.

The Nikkei index strengthened this morning as Kazuo Ueda, the new governor of the Bank of Japan who will take office in April, stated in parliament that he would maintain a very accommodative monetary policy, given that inflation is not far from the target level of 2 percent. It was announced this morning that the core inflation rate in Japan reached 4.2 percent in January, the highest level since 1981.

Dollar Strengthens, Oil Prices Rise

In the currency markets, the value of the dollar against a basket of currencies has slightly increased and is hovering near the highest levels in seven weeks. The dollar index, which shows the value of the U.S. dollar against the other six major world currencies, is around 104.55 points, while it was 104.50 points at the same time yesterday. Meanwhile, the dollar exchange rate against the Japanese currency slipped from yesterday’s 134.80 to 134.70 yen.

However, the U.S. currency has strengthened against the European currency, causing the price of the euro to slip to 1.0600 dollars, down from 1.0610 dollars at the same time yesterday.

Oil prices, on the other hand, have risen for the second consecutive day. The price of a barrel in the London market increased by 0.60 percent to 82.70 dollars, while in the U.S. market, a barrel rose by 0.70 percent to 75.90 dollars.