U.S. Equity Markets rose to new highs as Fed Chair Jerome Powell assured that the central bank would not pull support from the economy, before selling off into the close, led by the NASDAQ Composite which ended yesterday’s session with a loss of 0.22%. Investors had to digest inflation data and testimony from Federal Reserve Chair Jerome Powell. Producer Price Index (“PPI”) rose more than expected, fuelling the inflation fears. These data indicate that manufacturers’ input costs keep rising, making it likely that they will pass them onto customers. Powell was the other big story, as he gave Testimony before Congress. Powell said that the Federal Reserve still thinks it is too soon to remove economic support. He stated the Fed remains committed to attaining its goals of maximum employment and stable prices. This implies that bond purchases are not going away until the Fed feels the economy has recovered the jobs lost due to the pandemic. This helped ease some of the fears from the inflation data, pushing markets higher. European Markets closed mixed. Trade representatives from the U.S. and U.K. agreed to strengthen bilateral ties going forward, including working together on competitive threats posed by China. British labour redundancies fell to the lowest level since 2015 in June, as businesses look to hire to keep up with the economic restart. European Central Bank Governing Council member Constantinos Herodotou said it is prepared to take action should inflation not prove transitory. In Asia, the White House was said to be preparing to warn American companies about the risks of doing business in Hong Kong, including the China’s ability to access data stored there. Japanese manufacturers’ business confidence rose in July according to the Reuters/Tankan survey, hitting its highest level since November 2018. South Korea Prime Minister Kim Boo-kyum said the government would raise coronavirus restrictions across most of the country as infections continue to rise. The Westpac-Melbourne Institute’s Australian Consumer Confidence data for July rose versus June, indicating households are increasingly positive about their income potential. Elsewhere, Oil fell 3.38% as investors weighed conflicting reports of a production agreement between OPEC and the United Arab Emirates, while Bitcoin rose 1.5% in Dollar weakness.
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