US Federal Reserve Chair Kevin Warsh reiterated at the European Central Bank annual conference in Portugal on Wednesday that the Fed will not provide forward guidance on future rate policy and emphasized the central bank's commitment to returning inflation to the 2% target. US stocks declined on July 1 with the Dow closing down 13 points at 52305, the S&P falling 0.22% to 7483, and the Nasdaq dropping 173 points or 0.66% to 26040, while Hong Kong stocks rebounded on July 2 with the Hang Seng Index rising 273 points or 1.2% to 23154 at midday. Markets interpreted Warsh's remarks as leaving rate hikes as a potential option if inflation remains elevated. The 10-year US Treasury yield rose 7.9 basis points to 4.501% and the 2-year yield increased 5.2 basis points to 4.191% following the speech.
Fed Chair Warsh Reaffirms 2% Inflation Target at ECB Conference
Fed Chair Kevin Warsh stated at the European Central Bank annual conference in Portugal that the Federal Reserve is formulating a new policy roadmap and will not provide forward guidance on future interest rates. Warsh noted that inflation pressures have eased in recent weeks but reiterated the Fed's determination to return inflation to the 2% target. He emphasized that the central bank maintains autonomy in determining appropriate policy direction and that the Fed's long-standing independence will not change. Markets interpreted the remarks as indicating the Fed views reaching the 2% inflation target as paramount, with rate hikes remaining a potential option if inflation stays elevated for an extended period.
US Stocks Close Mixed as Meta Gains 8.8% on Cloud Business Report
US stocks traded lower on July 1 in the first session of the second half of the year. The Dow Jones Industrial Average opened down 88 points and expanded losses to as much as 292 points with an intraday low of 52026 before recovering to briefly touch 52742. The index closed at 52305, down 13 points. The S&P 500 declined 0.22% to 7483 and the Nasdaq fell 173 points or 0.66% to 26040. Meta shares surged 8.8% following a Bloomberg report that the company plans to build a cloud business and sell excess AI computing capacity to compete with Amazon's AWS and Microsoft Azure.
The US dollar index rose as much as 0.41% to 101.6. The Japanese yen reached a 40-year low before recovering 0.17% to 162.3 per US dollar.
Hong Kong Stocks Rise 1.2% in Morning Session After Two-Month Decline
Hong Kong stocks opened higher on July 2 following a holiday closure on July 1. The Hang Seng Index opened up 190 points at 23071 and reached an intraday high of 23335, up 454 points. The index briefly narrowed gains to just 102 points with a low of 22983 before buyers pushed the benchmark back above 23000. The Hang Seng Index closed the morning session up 273 points or 1.2% at 23154. Midday turnover reached HK$213.387 billion with northbound capital inflows of HK$4.125 billion.
FAQ
What did Fed Chair Warsh say about interest rate policy at the ECB conference?
Fed Chair Kevin Warsh stated at the European Central Bank annual conference in Portugal that the Federal Reserve will not provide forward guidance on future interest rates and is formulating a new policy roadmap. He reiterated the Fed's commitment to returning inflation to the 2% target and emphasized that the central bank's long-standing independence will not change.
How did US stocks perform on July 1?
US stocks closed mixed on July 1 with the Dow Jones Industrial Average down 13 points at 52305, the S&P 500 declining 0.22% to 7483, and the Nasdaq falling 173 points or 0.66% to 26040. Meta shares gained 8.8% following reports of the company's plan to build a cloud business to compete with Amazon AWS and Microsoft Azure.
How much did Hong Kong stocks rise on July 2?
The Hang Seng Index rose 273 points or 1.2% to 23154 at the midday close on July 2. The index opened up 190 points at 23071 and reached an intraday high of 23335, up 454 points, with midday turnover of HK$213.387 billion and northbound capital inflows of HK$4.125 billion.
