After casting off a morning selloff to bounce back and close in the green, US stocks are trying to keep positive momentum going this morning. US index futures are up 0.2%-0.3% this morning, building on gains of 0.5% for the Dow and 1.4% for the NASDAQ yesterday. Overseas, European indices are on the rise again with the Dax up 0.2% and the FTSE up 0.6%. Asia Pacific indices soared overnight including a 2.8% rally for the Hang Seng and a 1.9% pickup for the Nikkei.
Today’s high but in-line US consumer price index inflation report (7.0% as expected vs previous 6.8%) has done nothing to derail the positive response to yesterday’s comments from Fed Chair Powell at his nomination hearing. He indicated that monetary policy needs to be tightened because the economy has strengthened and that the Fed will do what it needs to do to contain inflation. Powell suggested that the Fed is looking at raising interest rates after asset purchases end in March but that it is not considering running down its balance sheet until perhaps late in the year, which is a bit less hawkish than some investors had feared.
Powell’s bullish talk about the health of the economy no longer needing emergency support also has had a positive effect on commodity markets, particularly copper which is up 2.25% today and has regained the $4.50/lb level. A cold snap has natural gas up 3.7% today, while WTI crude oil is up another 0.3% and trading nicely above $80.00/bbl. In another sign of improving investor confidence, cryptocurrencies are bouncing back today with Bitcoin up 1.2%.