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16.10.2026 10:27 AM
Risk appetite returns

Stocks are rising today as traders dial back Fed hike expectations after a speech by Fed Chair Kevin Warsh, who did not signal any increased urgency to tighten policy despite this week's tough inflation prints. The MSCI Asia Pacific index rose by 1.4% after a 2.8% drop on Thursday. US index futures are up about 0.2%, and European equities look set to open roughly 0.8% higher.

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The most notable bounce came from South Korea. The Kospi rallied by 4% after Thursday's sell-off sent it to its lowest close since April, while Samsung Electronics and SK Hynix each gained more than 4% after plunging by over 10% on Thursday. The S&P 500 is also clawing back losses after three down days. It's worth noting that the market had already been recovering before Warsh spoke, as pressure on semiconductors eased — his remarks simply added further optimism.

Warsh offered little about policy direction or the near-term US economic outlook beyond reaffirming the Fed's commitment to price stability. He called AI possibly the most significant change for the US and global economy in his lifetime and described it as a medium-term supply-side positive. "I don't prejudge meetings," Warsh said in Bangkok, adding that he doesn't believe in committing to moves ahead of meetings this year.

The market reaction was quick. The odds of an October rate hike fell to about 15% from more than 25% on Thursday. Warsh's refusal to commit to another interest rate hike led to partial unwinding of aggressive tightening bets, and his saying that he's not pre-deciding policy after strong inflation data helped restore risk appetite. Bonds remained a little weaker on the day after yields eased across the curve on Thursday.

Recall that September's quarter-point rate hike was the Fed's first since 2023 and had unanimous support from all 19 voting members, with a majority viewing another hike this year as possible. In recent weeks, several officials signaled that further tightening might be needed but emphasized they have time to gather data.

Other markets were quiet. Gold was little changed near $4,172/oz versus $4,145.80 on Thursday, while Brent eased by 0.7% to $105.20/bbl after trading at $106.30 on Wednesday.

All of this suggests that, for now, with the Fed unwilling to commit to more rate hikes and oil trading near $105, the equity rebound can continue. However, I don't see it as a durable reversal. If tech earnings disappoint, the market would likely resume risk-off behavior quickly, and the dollar would benefit from higher rate expectations. Without broader sector participation and stabilization in semiconductors, I expect indices to remain vulnerable.

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As for S&P 500 technicals, the immediate task for buyers today is to overcome the resistance level of $7,756. That would show upside momentum and open a move toward $7,774. Holding $7,793 is also a priority for bulls to strengthen their position. If the price moves lower amid falling risk appetite, buyers must show up near $7,737. A break below that level would likely push the index down to $7,718 and open the way to $7,698.

Jakub Novak,
InstaForex के विश्लेषणात्मक विशेषज्ञ
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