Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Stocks Steady As Fed Takes Centre Stage

Published 19/09/2017, 16:20
Updated 03/08/2021, 16:15

Europe

European stock markets are experiencing low volatility today, and trading ranges are small. Dealers don’t have a whole lot to go on news wise as there hasn’t been any major change to the economic or political outlook.

The FTSE 100 is bouncing back froma Friday’s major drop in value. Last week the British market crashed through the significant 7300 region, and if that mark isn’t re-taken, the wider bearish outlook could remain.

On the Continent, the DAX and CAC 40 are taking a breather after snapping out of a downward trend that was in place since the start of the summer. Whether the recent positive move can continue or not remains to be seen. The inability to keep pressing higher could be a sign that buyers have run out of steam.

Ocado (LON:OCDO) shares lost ground today after the online grocery retailer stated that costs ticked up. The rest of the third-quarter update was solid, revenues increased by 13%, and the weekly transactions were higher, but the size of the average transaction was a touch lower. Amazon (NASDAQ:AMZN) haven’t eaten into their market share yet, but through their takeover of Whole Foods, the online giant will have access to the UK market. Ocado will need to get their costs under control if they want to compete with Amazon.

US

Dow, S&P 500, Nasdaq 100. It is another strong session for US equities where new record highs have been set. The bullish sentiment on Wall Street knows no bounds, and we have yet to see any indication of investors’ appetite waning.

The Federal Reserve start their two day meeting today, and the announcement will be made at 7pm tomorrow, and there will be a follow-up press conference at 7.30pm. The market is not expecting any change to interest rates, but we might see the beginning of the unwinding of the Fed’s balance sheet. Some investors feel the balance sheet reduction scheme could start next month.

Dealers are pricing in a 58% probability of an interest rate hike in December, and that will be the focus of the update tomorrow. The impact of Hurricane Harvey and Irma on the economy, the debt ceiling talks and uncertainty over the future membership of the Fed, are the factors playing on traders’ minds.

FX

The EUR/USD has been broadly moving lower today, but it is still higher on the session. The jump in the German ZEW economic sentiment was impressive, but it couldn’t prop up the single currency. The September reading came in a 17, while the consensus was for 12.5, and the previous reading was 10.

A source at the European Central Bank (ECB), said the strength of the euro is causing problems for the region, as it is keeping a cap on inflation. This may prevent the ECB from trimming the stimulus package in the next few months.

The GBP/USD is higher today after its decline yesterday, where Mark Carney, the head of the Bank of England, gave a speech that wasn’t as hawkish as traders were expecting. Mr Carney did talk about monetary tightening and now that it has sunk in, we are seeing a continuation of the positive move in the pound versus the greenback.

Commodities

Gold is in positive territory today as the metal is bouncing back from dropping to its lowest level in nearly three weeks yesterday. The dip in the US dollar today is also helping the gold price. The metal is still in its upward trend, and while its holds above the $1300 mark, its outlook may remain bullish. Gold traders will be keeping an eye on the Fed announcement tomorrow.

WTI and Brent Crude are marginally lower after S&P Global Platts stated they expect US oil inventories to rise. The Energy Information Agency (EIA) will release the inventory figures tomorrow and dealers are expecting a reading of 2.4 million barrels. Oil refineries in the US are returning to normal post Hurricane Harvey and Irma. The back log caused by the adverse weather will take some time to work through.

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

Original post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.