Neal Bhai Reports — Markets Waiting for Hints on Future from This Week’s Fed Meet — Markets around the globe will be on tenterhooks with the US Federal Reserve’s two-day meet starting on Tuesday when the Bank of Japan will also meet and global markets will keep a close track to see what clues they provide for the future.
Though the American central bank is unlikely to increase rates due to the weaker-than-expected jobs data, investors will watch out for comments on the direction of interest rates in the near future.However, analysts warn that a rate hike can’t be written off. As for Bank of Japan, there is a speculation about whether the central bank will add to its unprecedented stimulus and keep money flowing into higher-yielding assets.
“There still is an element of nervousness lurking with two major central bank meetings happening this week,“ said Gautam Chhaochharia, head of research at UBS Securities. “Markets will watch out for the stance taken by these bodies and its impact on bond yields. If bond yields rise, it could spell trou ble for markets.“
American markets ended in the red on Friday. Dow Jones declined 0.34%, S&P 500 fell 0.26% while FTSE 100 Futures slid 0.47%. Asian markets, barring China’s Shanghai Composite, rose between 0.4% and 0.8%. “Unless there is a surprise from the Fed, things should go off reasonably smoothly,“ said Nilesh Shah, MD, Kotak Mahindra AMC.
“Fed futures are indicating that the US markets is not expecting rate hike action in September but rather towards the end of the year.“ BSE Sensex fell 0.68% last week. The 30-stock index has gone up 1.9% last month, climbed 7.8% in the last three months and has surged 9.32% since the beginning of the year. — Gold Silver Reports