# Stocks rally stalls, eyes Powell testimony for rate clues Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-06-19 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Stocks Rally Stalls: Powell Testimony Holds Key Rate Clues Meta Description: Stay updated on global stocks as Powell's testimony impacts market direction and interest rate expectations. Follow insights from Reuters. URL: https://financedigest.com/stocks-rally-stalls-eyes-powell-testimony-for-rate-clueshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-06-19t003822z1lynxmpej5i00artroptp4thailand-stocks-1736813863403-compressed.jpg) # Stocks rally stalls, eyes Powell testimony for rate clues By Naomi Rovnick and Stella Qiu LONDON, SYDNEY (Reuters) -Global shares drifted on Monday, consolidating gains after hitting a 14-month high last week, as investors awaited testimony from U.S. Federal Reserve Chair Jerome Powell in markets that remain dominated by [monetary policy](https://www.financedigest.com/uks-ftse-100-dips-on-scope-of-tighter-monetary-policy-informa-jumps.html "UK’s FTSE 100 dips on scope of tighter monetary policy; Informa jumps") bets. The MSCI’s broad gauge of world [stocks](https://www.financedigest.com/mutual-funds-vs-stocks-which-is-better.html "stocks") was steady, with Wall Street markets closed for the Juneteenth holiday. In Europe, the Stoxx 600 share index fell 0.5% in early trading. After a [week in which the stock market](https://www.financedigest.com/u-s-stock-markets-treasury-yields-perk-up-oil-falters-as-choppy-week-winds-down.html "U.S. stock markets, treasury yields perk up, oil falters as choppy week winds down") cheered the Fed’s decision to skip a rate increase in June, Powell is scheduled to deliver congressional testimony on Wednesday and Thursday. Hopes that the [Fed will end its most aggressive rate](https://www.financedigest.com/dollar-bounces-as-fed-seen-keeping-up-aggressive-rate-hikes.html "Dollar bounces as Fed seen keeping up aggressive rate hikes") increase campaign in decades are boosting global stock indices dominated by the U.S. tech megacaps that tend to outperform when [risk appetite](https://www.financedigest.com/u-s-dollar-climbs-to-two-year-peak-as-risk-appetite-tumbles-yuan-drops.html "U.S. dollar climbs to two-year peak as risk appetite tumbles; yuan drops") is buoyed by easier monetary policy. Billions of dollars have flowed into big tech in recent weeks, with analysts citing the productivity-improving potential of [artificial intelligence](https://www.financedigest.com/types-of-artificial-intelligence.html "artificial intelligence") for the rally. The obvious narrative of AI has dominated this rally in [tech stocks,”](https://www.financedigest.com/markets-mixed-as-tech-boosts-us-stock-futures-europe-dips.html "Markets mixed as tech boosts US stock futures, Europe dips") said Dan Cartridge, portfolio manager at Hawksmoor. But a lot of it is also to do with interest rate expectations,” he added, [warning that the Fed](https://www.financedigest.com/shares-mixed-on-fed-warning-china-acts-on-property.html "Shares mixed on Fed warning, China acts on property") staying hawkish would mean “we quite quickly see valuation compression again. In Europe, sterling [traded near its highest against the dollar](https://www.financedigest.com/oil-prices-ease-to-trade-near-2-month-lows-on-china-demand-fears-dollar-strength.html "Oil prices ease to trade near 2-month lows on China demand fears, dollar strength") since April 2022, at $1.2814. Bets that the [Bank of England](https://www.financedigest.com/bank-of-england-launches-first-sector-wide-liquidity-stress-test.html "Bank of England launches first sector-wide liquidity ‘stress test’") would raise interest rates to a 15-year high this week, as inflation continues to run at more than four times its target, have bolstered the pound. Two-year British [government bond](https://www.financedigest.com/lg-says-not-a-forced-seller-of-uk-government-bonds.html "L&G says not a forced seller of UK government bonds") yields, which reflect rate expectations, added 6 basis points (bps) to around 4.94% – near last week’s 15-year high. The 10-year British gilt yield stood at 4.4%, in an [inverted yield curve](https://www.financedigest.com/world-shares-rise-u-s-yield-curve-inverts-after-strong-jobs-data.html "World shares rise, U.S. yield curve inverts after strong jobs data") pattern that can precede recessions. In Asia, [Japan’s Nikkei tumbled](https://www.financedigest.com/dollar-hits-20-yr-high-as-yen-tumbles-on-dovish-bank-of-japan.html "Dollar hits 20-yr high as yen tumbles on dovish Bank of Japan") 1%, edging down from three-decade highs. Chinese blue chips fell 0.9%, while [Hong Kong’s](https://www.financedigest.com/evergrande-winding-up-lawsuit-in-hong-kong-adjourned-to-nov-7.html "Evergrande winding-up lawsuit in Hong Kong adjourned to Nov 7") Hang Seng index slumped 1.2%, as investors’ hopes of forceful economic stimulus from Beijing were dashed by the lack of concrete details from a cabinet meeting on Friday. Goldman Sachs on Sunday cut its forecast for [China’s GDP growth](https://www.financedigest.com/oil-slides-more-than-1-on-china-growth-uncertainties.html "Oil slides more than on China growth uncertainties") this year to 5.4% from 6.0%, joining other major banks to slash growth expectations for the world’s second largest economy. But the People’s Bank of China is also widely expected to [cut its benchmark loan prime interest rates](https://www.financedigest.com/russias-2022-inflation-seen-at-13-4-more-rate-cuts-to-come-reuters-poll.html "Russia’s 2022 inflation seen at 13.4%, more rate cuts to come: Reuters poll") on Tuesday, following a similar reduction in medium-term policy loans last week. Elsewhere, the dollar index was little changed against major peers at 102.33 on Monday, after [falling 1.2% the previous week](https://www.financedigest.com/battered-sterling-gets-respite-but-set-for-weekly-fall-vs-dollar.html "Battered sterling gets respite but set for weekly fall vs dollar"), the most in five months. The yen was undermined by Friday’s dovish Bank of Japan meeting , touching a seven-month low of 141.97 per dollar, while the hawkish European [Central Bank](https://www.financedigest.com/central-banks-opt-for-shock-and-awe-to-tame-inflation.html "Central banks opt for shock and awe to tame inflation"), which raised rates by a quarter point last week, helped the euro hold near a five-week top at $1.093. In [oil markets](https://www.financedigest.com/iran-deal-a-wild-card-for-oil-market-strained-by-supply-risks-reuters-poll.html "Iran deal a wild card for oil market strained by supply risks – Reuters poll"), U.S. crude futures fell 0.9% to 71.12 per barrel, and Brent crude was down 0.6% to $76.13. \[O/R\] Gold prices were flat at $1,954.39 per ounce. (Reporting by Naomi Rovnick and Stella Qiu; Editing by Christopher Cushing, Tom Hogue and Gerry Doyle) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---