US Stocks Gain Again Ahead of Fed – Dow up 0.8%
All three of the major US stock indices gained ground yesterday ahead of today’s conclusion of the latest FOMC meeting. The Dow led the way higher, finishing up 0.83%, followed by the S&P which closed 0.56% in the black with the Nasdaq trailing behind for a change up 0.39% on the day. The Yen took a hit against the greenback and on the crosses after the BOJ came through with its first-rate hike in 17 years, losing around 1% on the day with the Dxy overall moving 0.35% higher to trade near 2-week highs. US treasury yields dropped back off recent multi-week highs ahead of today’s rate call, the 2-year dropping 4.3 basis points to 4.693% and the 10-year losing 3.4 basis points to 4.306%. Oil jumped to multi-month highs, with global benchmark Brent adding 0.6% to trade up to $87.83 and WTI gaining 0.9%, up to $83.47 per barrel. Gold dropped off slightly over the day, losing 0.2% with Bitcoin taking a more substantial knock, losing 6%, to trade back down to the $63,000 level.
Will the Fed Move the Market Today?
Traders are expecting to see some relatively rangebound conditions for most of the trading day today as the market awaits the latest update from the world’s most influential central bank. Recent inflation data prints and market levels have made this meeting much more interesting than it was shaping up to be a couple of weeks ago and although a ‘no change’ call is fully priced in, the message that we receive from Jerome Powell and co in the statement and press conference could set markets alight. Given that it was only a matter of weeks ago that most market participants were expecting us to see a rate cut from the Fed today and that expectation is now being pushed out to July you would have expected a bit of a dip in US equities, however, that’s clearly not the case as we sit at historic highs so anything but a very hawkish turn in rhetoric from the FOMC should see any dips attracting buyers in the trading sessions ahead.
All Eyes on the Federal Reserve Today
It is set to be another busy day for traders today and Asian markets will have more risk updates to deal with today after yesterday’s double central bank bonanza. The focus will move to the world’s second-largest economy with the release of Chinese Prime Loan Rates due out midway through the session, once again with Chinese markets hoping for a bit more stimulus. The London session sees its first major data release of the week in the form of the key UK CPI data as well as a speech from ECB President Christine LaGarde, but the highlight of the day, will be the FOMC rate decision, statement and press conference towards the end of the New York session – no change expected but anticipate plenty of market moves around the event as the market looks at a fresh dot plot amongst other things.
