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22 April 2024 | FXGT.com

Weekly Market Recap – Hawkish Fed Remarks & Increased Geopolitical Tensions Drive US Stocks Downward

  • US Stocks Decline: The S&P 500 had its worst week in over a year, falling below 5,000 points due to strong economic data and hawkish Federal Reserve remarks, leading to revised expectations for interest rate cuts. Tensions between Israel and Iran also pressured equity markets. Over the week, the S&P 500 dropped 3.1%, the Nasdaq 100 declined 5.35%, and the Dow was nearly unchanged.

  • Fed’s Policy Shift: After three months of high inflation data, Federal Reserve policymakers anticipate keeping interest rates high for an extended period. Fed Chair Jerome Powell stated at a Washington event that current economic indicators suggest controlling inflation will take longer than expected.

  • Market Reaction to Middle East Tensions: Following an unprecedented strike by Iran on Israel and a potential Israeli retaliation, market reactions were surprisingly restrained, with both stocks and crude oil quickly recovering from initial shocks.

  • Impact on Oil Prices: The immediate impact of escalating tensions between Israel and Iran was evident in the oil markets, with WTI crude oil prices briefly surging 4% to over $85 per barrel on Friday morning. Prices later retreated, closing the week around $83 per barrel, marking a 3.45% weekly decline. This suggests that the temporary easing of tensions may have influenced market dynamics.

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