16 Mar

Today investors’ attention is focused on FOMC meeting

March 16, 2022

by JustForex

The US stock indices finished Tuesday’s trading with a confident growth. By the close of the stock market, the Dow Jones index (US30) gained 1.82%, the S&P500 index (US500) added 2.14%, and the NASDAQ technology index (US100) jumped by 2.92%.

The long-awaited FOMC meeting in the US will take place today, where analysts expect to see an interest rate hike. Investors should also keep a close eye on Jerome Powell’s speech at the press conference. There is a 100% chance that the US Federal Reserve will raise interest rates by at least 25 basis points today. Analysts are confident that the rate will rise at every Federal Reserve meeting until the end of the year. But with inflation approaching 8%, many believe that rising rates to 2% by the end of the year will not be enough to dampen consumer price growth, so the Fed needs to start cutting the balance sheet. The US stock market has already included a more aggressive scenario for a rate hike, so now the indices can significantly increase in price even despite the growth of the dollar index.

The S&P Dow Jones will exclude Russian and Belorussian bonds from its indices after March 31.

Tesla has raised the price of its vehicles due to a sharp increase in the price of nickel, a key component in electric vehicle batteries.

Major European indices traded without a single trend yesterday. German DAX (DE30) decreased by 0.08%, French CAC 40 (FR40) fell by 0.23%, Spanish IBEX 35 (ES35) gained 0.02%, British FTSE 100 (UK100) lost 0.25%. According to analysts, European markets have already put very negative scenarios in the prices. The ZEW Indicator of Economic Sentiment for the Eurozone and Germany showed the biggest drop since the study began in 1991. This indicates a high probability that Europe will face stagflation (a slowdown in economic growth with high inflation). The war in Ukraine significantly worsened Europe’s economic prospects. Another round of talks between Russia and Ukraine ended in vain. With the ECB not planning to tighten monetary policy anytime soon, analysts expect a sharp slowdown in Europe’s economic indicators.

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Oil prices have somewhat stabilized. In previous days, investors sold their contracts as oil reached analysts’ targets. Oil prices are expected to fall further only if the US manages to negotiate an increase in supply. Given that the deal with Iran failed again, analysts are confident that oil prices will remain high. Today the US will publish a report on crude oil inventories which will have a significant impact on oil prices.

Yesterday, Japan’s Nikkei 225 (JP225) gained 0.15%, Hong Kong’s Hang Seng (HK50) decreased by 5.72%, and Australia’s S&P/ASX 200 (AU200) lost 0.73%. Japan’s industrial production fell by 0.8% month-over-month in January 2022, down from a 1% drop a month earlier. Imports jumped to 34% in annual terms, while exports also accelerated. China is experiencing its biggest COVID-19 surge since 2020. Container ships lines at China’s major ports are lengthening by the day as the COVID-19 outbreak threatens to unleash a new wave of disruption to global supply chains. Due to restrictions, Tesla has suspended operations at its Shanghai plant for two days. South Korea’s unemployment rate fell to a record low of 2.7% in February from 3.6%.

Main market quotes:

S&P 500 (F) (US500) 4,262.45 +89.34 (+2.14%)

Dow Jones (US30) 33,544.34 +599.10 (+1.82%)

DAX (DE40) 13,917.27 -11.84 (-0.085%)

FTSE 100 (UK100) 7,175.70 -17.77 (-0.25%)

USD Index 99.04 +0.04 (+0.04%)

Important events for today:
  • – Japan Industrial Production (m/m) at 06:30 (GMT+2);
  • – US Retail Sales (m/m) at 14:30 (GMT+2);
  • – Canada Consumer Price Index (m/m) at 14:30 (GMT+2);
  • – US Crude Oil Reserves (w/w) at 16:30 (GMT+2);
  • – US FOMC Meeting Minutes at 20:00 (GMT+2);
  • – US Fed Interest Rate Decision at 20:00 (GMT+2);
  • – US FOMC Press Conference at 20:30 (GMT+2);
  • – New Zealand GDP (q/q) at 23:45 (GMT+2).

by JustForex

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.


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