Morning wrap (05.05.2022)

• FOMC delivered a 50 basis point rate hike and announced the beginning of quantitative tightening in June at a pace of $47.5 billion per month. Pace will increased to $95 billion after 3 month

• US indices recovered from a drop and rallied yesterday after Powell ruled out 75 basis point rate hikes for now. S&P 500 gained 2.99%, Dow Jones moved 2.81% higher and Nasdaq rallied 3.19%. Russell 2000 jumped 2.69%

• Upbeat moods extended into Asian trading but liquidity was limited due to holidays in South Korea and Japan. S&P/ASX 200 gained 0.8% while indices from China traded up to 1% higher

• DAX futures point to a significantly higher opening of the European cash session

• In the latest evidence of how hard talks are, United States said that preparations are being made for an agreement with Iran as well as lack of agreement

• Chinese army said it will intensify naval drills in the East China Sea near Taiwan

• Brazilian central bank delivered 100 basis point rate hike - in-line with expectations

• Chinese services PMI dropped from 42.0 to 36.2 pts in April (exp. 40.1)

• Australian building approvals were 18.5% MoM lower in March (exp. -12% MoM)

• Oil is adding to yesterday's gains. Brent and WTI trade around 0.9% higher following yesterday's over-5% gains

• Precious metals are trading higher. Gold is top performer, adding 1.1%

• CAD and USD are the best performing major currencies while GBP and AUD lag the most

Powell's assurance that 75 bp rate hikes are not actively considered was enough to help US indices recover from losses and rally. Nasdaq-100 (US100) rallied over 3% yesterday and the move continued overnight. Index is trading less than 1% below resistance zone marked with 23.6% retracement of recent correction (13,700 pts area). Source: xStation5