The confident Fed’s President
12.02.2020, 15:14

The confident Fed’s President

Yesterday the financial markets were marked by a rise in the value of the main world stock indexes. The serene speech of the president of the Federal Reserve (Fed), Jerome Powell, as well as the general confidence felt that economic impacts caused by the coronavirus will not be so great, were the two main factors that explained this increase. Concerning the latter, the Chinese medical authorities have announced that they expect the spread of the virus to be controlled in April - and this could be seen as a source of confidence for investors.

It is common, in a booming stock market, for the demand for more secure assets to tend to be lower. This was the case in Europe and its debt market, where the yields of the government bonds for the main economies have increased.

As a consequence, and at a time when the market is apparently more confident, the Dollar started to correct against the Euro.

With regard to the Pound Sterling, it is possible to observe the continuous correction of the last few days. In addition, yesterday was strongly driven by news that came out in relation to the estimates of the English Gross Domestic Product, which was above expectations. As a result, the Pound ended up having this strong appreciation throughout the day.

With regard to crude oil, raw material prices rose again during yesterday's session. Contributing to this was a meeting between Vladimir Putin and Igor Sechin of OPEC. The aim of the meeting was to discuss a possible cut of 600,000 barrels per day. Apparently, it will only be decided at a next meeting to be held on the 5th and 6th of March.

Gold, on the other hand, on days marked by confidence and less risk aversion, a day like yesterday, tends to decrease in value.

  • Name: Frederico Aragao Morais
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