Jerome Powell Again Stressed on “Price Stability” and hinted at “Unpopular Decisions”

Wall Street equity futures dropped and stocks in Europe fell as investors assessed hawkish comments from Federal Reserve officials and awaited remarks from Chairman Jerome Powell for clues on further path of interest rates amid a slew of corporate layoffs ranging from hi tech heavyweights like Amazon.com (AMZN) to banking giant Goldman Sachs Group (GS).

Federal Reserve Chairman Jerome Powell underscored earlier today that “restoring price stability in the face of high inflation could necessitate the central bank's use of action unpopular in the short term “as we raise interest rates to slow the economy.” “The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors,” Powell stressed in the speech at a symposium organized by the Sveriges Riksbank in Sweden.

On the macro side, car sales in the U.S. decreased by 8% at the end of 2022, and amounted to 13.7 million units. This was the worst figure since 2011. Car sales have been topping the 17 million mark for 5 consecutive years prior to the onset of the Covid-19 pandemic in 2020.

Major stock indexes in Europe opened lower on Tuesday as worries about the state of the global economy affected sentiment. Investors anticipated comments by United States Federal Reserve Chair Jerome Powell scheduled for later in the day, as well as the meeting between NATO Secretary General Jens Stoltenberg and top European Union officials at which they are set to sign a joint declaration on cooperation.

The Euro Stoxx 600 fell 0.65% at 3:45 p.m. CET. The British FTSE 100 decreased by 0.27% concurrently. The worst performer was Anglo-American (AAL.L), whose shares dropped 2.46%. The German DAX traded 0.22% lower concurrently with Zalando (ZAL.DE), down 3.46%, leading the losses. The CAC 40 declined 0.66% as ArcelorMittal (MT) fell 0.73%.

Morgan Stanley’s new approach included raising its Chinese economic growth forecast 0.3 percentage points to 5.7%, lifting its yuan target to 6.65 to the dollar and predicting another 16% jump in MSCI's fast-rebounding Chinese equity index. According to Bloomberg, Taiwan Semiconductor (TSM), the world's leading custom chipmaker, increased its revenue by 43% YoY to NT$625.5 billion ($20.6 billion) in the fourth quarter. The result was well below the average analysts' forecast of NT$636 billion. The performance of the company undershot the expectations for the first time in two years.