On Thursday the latest meeting of the US Fed took place during which the officials decided to leave the rates unchanged on the historical low of 0-0.25% which made the US Dollar continue falling for the 3rd day in a row. At first, the US market reacted positively on the news with the stock indices advancing more than 1%. But later the investors became disappointed by the Fed Chair Janet Yellen’s comments on the global economic situation and its impact on the US resulting in the falling shares prices. In particular, the economic problems of the other countries may slow down the US GDP growth regardless of the Fed actions. The US regulator may still hike the rates later this year emphasizing the need to watch the labour market and inflation which is to reach 2%. The Fed has slightly improved the US economic growth outlook for 2015 to 2.1% but decreased it for 2016 and 2017. The market participants are skeptical about the statement on the possible rate hike this year. The Fed futures funds estimate this opportunity to happen on October 27-28 at 17%, down from 40% before the yesterday’s statements. Despite the higher volatility, the trade volume on the US exchanges was in line with the average level of the last 20 sessions and totaled 8 bln. shares. The strong housing market and weekly unemployment statistics were released. Today at 16:00 CET the leading August indicator will be released. The tentative outlook is positive. Nevertheless, the US stock index futures are in the red.
The European shares are on decline today retracing the yesterday’s fall of the US shares. The Fed comments were given after the closure of the most EU stock exchanges. Moreover, the Eurobonds are achieving momentum accumulating the liquidity from the stock market and arousing interest in the euro. The Eurobonds were looking down previously on the worries about the possible rate hike making them less attractive for investors than the US Treasuries. The euro continues strengthening amid the weakening Dollar due to the unchanged rates. Note, that on Tuesday the data on the widening EU trade balance surplus in July were released followed by the strong current account balance today. During the last three years the trade balance was negative in one singular month while the current account balance was negative in two months. No more significant data is expected today in EU. On 14:30 CET the inflation in Canada is to come out which may influence the Canadian Dollar.
The Nikkei index today was looking down together with the other global stock indices. The additional negative is the strengthening Yen. The Japanese carmakers shares and exporters Toyota Motor, Honda Motor dropped 1.4% The Panasonic Corp quotes (the household appliances producer) decreased 2.1%. The shares of Dai-ichi Life Insurance, the Japanese insurance company, plummeted 6.2%. Investors assume it holds a big portfolio of US bonds that have fallen slightly together with the US Dollar.
The gold price is on increase today for the 3rd day in a row amid the US Dollar weakening. The quotes are those assets are oppositely directed.
The beef quotes went down right at the beginning of the first trading day following the US Labor day and the end of the picnic season which disaffirmed all the previous recommendations to buy from the “Technical analysis” section. Today the markets are waiting for the weekly report «Cattle-On-Feed» of the US Agricultural Department to come out at 17:00 CET. According to the forecasts, the growth range of the store cattle was 101,2-104,1% as on September 1st compared with the same period of the previous year. The average forecast is 103,4% while the average livestock units number is 10,049 mln. If the actual data of the US Agricultural Department diverges with the market participants expectations this may trigger significant price changes.