Awaiting Key Fed Announcement, World Stock Exchanges Trade at Record Levels

Awaiting Key Fed Announcement, World Stock Exchanges Trade at Record Levels

The US Federal Reserve is expected to announce the reduction of its asset purchase program by $ 120 billion a month in a statement released this afternoon, a move that marks a new chapter in the world’s monetary policy response to COVID. -19.

European equity markets rose to an all-time high for the second day in a row.

For their part, US stocks were flat on Wall Street as investors avoided making big bets before the close of the two-day Federal Reserve meeting. The Dow Jones Industrial Average was up 6.46 points, or 0.02%, at 36,059.09. The S&P 500 was flat at 4,630.65 points and the Nasdaq Composite was up 8.91 points, or 0.06%, at 15,658.52.

Meanwhile, the MSCI Global Index, which tracks the performance of equities in 50 countries, it added up to 0.02%, very close to another all-time high.

The Tokyo Stock Exchange was closed for a holiday, while MSCI’s broader Asia-Pacific equity index – which does not include Japan – was down 0.05%.

Fueled by fiscal and monetary stimulus, global stocks have thrived during the economic rebound after the recession triggered by the first wave of COVID-19 infections in 2020.

“From a purely macro perspective, negative real rates mean there is no alternative to stocks, while at the same time the earnings cycle is very strong.”said Salman Ahmed, global director of macroeconomics at Fidelity International.

“Negative real rates are a very powerful force”he added, as investors wonder if stocks are at risk of losing their edge over other assets with a steadily rising interest rate trajectory.

The markets are almost certain that the Fed will reduce its asset purchases, but they want signals from the monetary policy authorities about the possibility of rate hikes next year.

Fed officials are trying to keep the balance by giving the economy as much time as possible to recover while adjusting policy long enough to contain inflation.

Meanwhile, the president of the European Central Bank (ECB), Christine Lagarde, rejected the market bets on a increase in interest rates as early as October next year, saying it was “very unlikely” that such a move would occur in 2022.

Yields on euro zone government debt fell and Germany’s 10-year Bund yield fell to a one-month low of -0.19%.

At the same time, benchmark 10-year US Treasury yields were also trading lower at 1.5296%, far from last month’s recent high of 1.7%.

Movements in the currency markets were limited on Wednesday. The dollar index lost 0.12% to 94 points against a basket of large currencies.

Source From: Ambito

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