URGENT UPDATE: US equities are in freefall, the dollar is surging, and precious metals are experiencing a dramatic slump in early trading in New York. This turmoil follows the announcement by President Donald Trump that he has appointed former Federal Reserve governor Kevin Warsh as the next chairman of the central bank.
The market response has been swift, with the Dow Jones down 0.9% and the S&P 500 dropping 0.6% as of 11:15 AM EST. Not even tech giant Apple, which recently reported impressive quarterly earnings, could escape the fallout. Analysts are now assessing the implications of Warsh’s hawkish reputation on future monetary policy.
According to Evercore ISI’s Krishna Guha, “The Warsh pick should help stabilize the dollar and reduce the risk of extended dollar weakness.” The spot dollar index has surged 0.6% during this morning’s trading session, reflecting investor confidence in tighter monetary policy ahead. Guha further stated that Warsh is well-positioned to lead the Federal Open Market Committee towards potential interest rate cuts this year.
In contrast, precious metals are facing severe declines, with gold plummeting 6.8% to $5008.30 an ounce. The ongoing turmoil is affecting various sectors, with materials, utilities, and real estate leading the S&P’s losses.
Market highlights show a significant downturn:
– The ASX 200 futures are down 29 points or 0.3% to 8798.
– AUD is trading down 0.8% at US69.94¢.
– Bitcoin is down 2% to $82,669.
– Brent oil is slightly up 0.1% at $70.81 a barrel.
– The 10-year US Treasury yield stands at 4.25%.
As the market braces for next week, a flurry of earnings reports is expected, with major companies such as Amcor and Beach Energy set to release their results. Additionally, the Reserve Bank of Australia is anticipated to hold a crucial policy meeting on Tuesday, February 6, where analysts predict a 25 basis point interest rate hike. Market expectations indicate a 70% probability for this hike.
The upcoming week also includes the release of January jobs data in the US, further influencing market sentiment.
As the reporting season heats up, attention will turn to tech giants like Alphabet (Google’s parent company) and Amazon, alongside significant players such as Walt Disney and Uber among more than 1,500 companies reporting.
This significant market shift and the potential for future interest rate adjustments underscore the urgency for investors to stay informed and prepared. The implications of Warsh’s appointment could reshape the economic landscape, making this a critical moment for financial markets globally.
