SYDNEY, June 20 — Asian shares were unable to sustain a rare rally today as Wall Street futures shed early gains amid worries the US Federal Reserve would this week underline its commitment to fighting inflation with whatever rate hikes were needed.
The S&P 500 fell by almost 6 per cent last week to trade 24 per cent below its January high. Analysts at BofA noted this was the 20th bear market in the past 140 years and the average peak to trough bear decline was 37.3 per cent. Chinese blue chips held steady perhaps aided by news President Joe Biden was considering removing some tariffs on China.
“At this stage it is hard to see a turn in fortunes until we see evidence of a material ease in inflationary pressures.” Relief seems unlikely this week with UK inflation figures expected to show another alarmingly high reading that could push the Bank of England into hiking at a faster pace.A whole chorus line of central bankers are also on the speaking calendar this week, led by a likely hawkish testimony from Federal Reserve Chair Jerome Powell’s to the House on Wednesday and Thursday.
“Financial conditions are likely to tighten further, consumers are experiencing a significant negative sentiment shock, energy and food supply disruptions have worsened and the outlook for foreign growth has deteriorated.” The hawkish outlook is keeping the dollar at 104.660 and near last week’s two-decade high of 105.790.
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