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Key Market Developments: Powell’s Testimony and More


Federal Reserve Chair Jerome Powell is set for his second day of semi-annual Congressional testimony, addressing the House of Representatives. Market participants are closely watching for indications of a potential rate cut in September.

1. Powell Returns to Capitol Hill

Federal Reserve Chair Jerome Powell is set for his second day of semi-annual Congressional testimony, addressing the House of Representatives. On Tuesday, before the Senate Banking Committee, Powell highlighted the cooling labour market as a key factor in future interest rate decisions. He emphasised that “elevated inflation is not the only risk we face,” noting significant labour market improvements since the pandemic’s onset. Market participants are closely watching for indications of a potential rate cut in September.

2. Futures Hold Steady; Market Awaits Powell’s Remarks

U.S. stock futures showed little movement early Wednesday as investors await Powell’s testimony. Dow futures fell 0.1%, while S&P 500 and Nasdaq 100 futures rose 0.1% and 0.2%, respectively. The S&P 500 and Nasdaq Composite hit record highs on Tuesday following Powell’s comments on possible monetary policy easing. With no significant economic data due Wednesday, attention is focused on Thursday’s June consumer price index report.

3. Microsoft Leaves OpenAI Board

Microsoft has relinquished its observer seat on the board of OpenAI amid increasing regulatory scrutiny of generative artificial intelligence. Microsoft cited improved governance at OpenAI as the reason for its departure. “Given significant progress by the newly formed board, we no longer believe our limited role as an observer is necessary,” Microsoft stated. OpenAI plans to hold regular stakeholder meetings with partners like Microsoft and Apple.

4. Chinese Consumer Deflation Signals Slow Recovery

China’s consumer inflation fell 0.2% in June, below expectations, with producer inflation contracting for the 20th consecutive month. This points to a sluggish recovery in the world’s second-largest economy. Weak consumer spending and high unemployment contribute to the economic slowdown, suggesting the need for additional stimulus measures from the Chinese government.

5. Crude Prices Fall on Chinese Deflation Concerns

Crude oil prices dropped on Wednesday, with U.S. crude futures down 0.4% to $81.12 a barrel and Brent crude down 0.4% to $84.33 a barrel. Concerns over deflation in China, the largest importer of crude, weighed on the market. However, a larger-than-expected draw in U.S. inventories provided some support, with data showing a 1.9 million barrel decrease last week.

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