Global shares fall as dollar rises ahead of Fed Powell’s testimony

Global shares fell, and the dollar rose ahead of testimony from Federal Reserve Chairman Jerome Powell, who is expected to offer an outlook for US rates, while weak Chinese trade data further weighed on oil and copper.

Statistics demonstrated a steep decrease in both China’s exports and imports in the first two months of the year, which was likely due to diminishing global economic vigor and frail domestic needs, thus hitting the Chinese stocks of premier companies. At the same time, the offshore yuan climbed higher against the dollar.

China’s supply of some raw materials has been very low over the past two months, prompting some concern that activity in the world’s biggest commodity importer could fall too far.

Beyond China, investors focus on US interest rate results and what Powell might say.

The MSCI All-World index of global shares fell 0.1% but was near Monday’s two-week high.

The 10-year Treasury note’s yield has increased by 100% over the last year, but has dropped 4 basis points to 3.942% as of today.

The two-year yield, more sensitive to changes in interest rate expectations, fell to 4.876%. Two-year gains have tripled in the past year to nearly 5%, the largest since 2007.

Money markets see US rates peaking at just 5.6% by September, from 4.50%-4.76%.

RBA decision signals the end of a policy-tightening cycle

The Reserve Bank of Australia raised interest rates as expected but toned down its dovish outlook, which investors saw as a sign that the end of the policy tightening cycle is nearing. It pushed the Australian dollar to a more than one-month low of $0.6664, a 1% loss on the day.

The dollar gained against the euro and sterling. Meanwhile, the yen had experienced losses earlier; however, the currency rose by 0.23% to 136.18, though still below the high of 137.12 recorded last week.

On Tuesday, Chinese trade statistics revealed that commodities, including raw copper and crude oil, had dropped during the initial two months of the year, prompting doubts about industrial necessity.

On the London Metal Exchange:

• Brent crude futures dropped 0.6%, settling at $85.74 per barrel.
• Copper futures experienced a second day of decline, with a 0.5% dip to around $8.868 per tonne.