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Investing.com – Top 5 things that rocked U.S. markets this week.
1. Trade War Mania Grips Wall Street as Traders Flee Risky Assets
At the onset of the week, much of investor focused was expected to be centred around one man: Jerome Powell, or “Jay”, Chairman of the Federal Reserve. Jay’s testimony Tuesday, in front of the House Financial Services Committee, drew a sharp reaction in US stocks– but just not the one expected.
Powell adopted a far more hawkish view than many had anticipated, expressing optimism on the pace of inflation as well as economic growth, while directing a subtle nod Trump’s way as he said: “fiscal policy has become more stimulative.”
That sent traders scrambling as they readjusted their outlook to four rate hikes from three total rate hikes this year, sending yields soaring, and U.S. stock markets nursing heavy losses.
Powell was back in spotlight Thursday, this time in front of the Senate Banking Committee, but chose more measured language, admitting that he sees “no evidence of the economy overheating.”
US stocks, however, were into selloff mode, as President Donald Trump’s proposal to impose a 25% tariff on steel imports and 10% tariff on aluminium, stoked investor fears that the U.S.’s main trading partners would hit back, raising the prospect of a global trade war.
It wasn’t long until those fears were realized somewhat as Reuters reported Friday that the EU is considering setting duties on about $3.5 billion of U.S. imports on iconic U.S. brands such as Harley Davidson, Bourbon, Blue Jeans.
Despite reversing Friday’s losses, the Nasdaq fell to weekly loss for the first time in three weeks.
2. WTI Crude Snapped 2-Week Winning Streak
Crude oil prices snapped a two-week winning streak despite settling higher on Friday, as the number of oil rigs rose to their highest in nearly three years adding to fears of a prolonged ramp up in US oil output.
Oil prices may have settled higher on Friday, but traders harbor little hope of a sustained rebound as sentiment on oil prices remain negative after the Energy Information Administration (EIA) released data Wednesday showed U.S. crude stockpiles continued to build for the second-straight week.
U.S. production, meanwhile, rose to 10.3 million barrels per day, according to the EIA, as U.S. shale producers continued to take advantage of higher oil prices.
On Friday U.S. crude futures rose 26 cents to settle at $63.25 a barrel.
3. Euro Notched Weekly Gain; Kuroda Delivered Knockout Blow to Yen Bears
EUR/USD ended the week positive, underpinned by a sharp selloff in the dollar as the rising prospect of a global trade war halting U.S. economic growth weighed on the greenback.