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World Today: Markets respond to Fed’s thoughts to slow down interest rate hikes

The Dow Jones closed more than 300 points higher on Thursday (March 2) after Atlanta Federal Reserve President Rafael Bostic urged the Fed to slow down its pace of interest rate hikes due to concerns about the economic impact. This decision is expected to have a ripple effect on global stock markets.

Asian stock markets are expected to open positively today, with the stock market futures index of Japan and Hong Kong rising after Mr. Rafael Bostic’s comments. The President of the US Federal Reserve’s Atlanta branch stated that a continuous interest rate hike of only 0.25% was reasonable and that the economic impact of a rate hike may begin to emerge in the spring of this year. He believes that slowing the pace of rate hikes will lessen the economic impact of the Fed’s aggressive rate hikes in recent times.

However, Tesla shares fell 5.85% after the company held its 2023 Investor Day in Austin, Texas, on Wednesday. Tesla CEO Elon Musk spoke about Master Plan 3 at the event, along with specifying the vision and past achievements, including revealing ways to expand the business in the long term. Investors were disappointed that Mr Musk did not reveal the Tesla Model 2, the low-cost car that had been expected to compete with other electric vehicles in the market.

In Pakistan, the Central Bank raised the policy interest rate by 3% to 20% on Thursday (March 2), the highest level since October 1996 and above analysts’ expectations of a 2% interest rate hike. The central bank described such interest rate hikes as a measure to stem inflation, after the Consumer Price Index (CPI) hit 31.5% in February on a yearly basis, the highest level in nearly 50 years.

Lastly, the Labor Department reported that initial jobless claims fell 2,000 to a seasonally adjusted 190,000 last week, against analysts who expected an increase to 195,000. This is the third straight week where the number of applications for initial jobless claims has fallen and stayed below the 200,000 level for seven straight weeks.

Today, S&P Global will report the Purchasing Managers’ Index (PMI) for the service sector in February of the United States at 9:45 p.m. Thai time, then the US Institute for Supply Management (ISM) will report the service sector index for February at 10:00 p.m. These reports are crucial indicators for the US economy and will be closely monitored by global markets.

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