Global stocks rally ahead of crucial Fed meeting

Wednesday, September 16, 2015

Asian equity markets rebounded strongly overnight. The Hang Seng index rallied by 2.50% towards 22,100, while the Shanghai Composite index climbed higher by 4.9% to retest 3,150. Risk appetite increased and the strong upside momentum across the US equity markets provided further support to the Asian indices. In Japan, the Nikkei index extended gains towards 18,200 after rising by 0.80% despite the recent poor economic data. Japan’s machine tool orders declined by 16.5% y/y in August from a 16.5% drop in July.  

Investors will be keeping an eye on the release of the Eurozone’s CPI inflation data later this morning. European equity markets extended gains in early trade as the DAX, IBEX, CAC and London equity benchmark indices increased between 1.0% and 1.4%. The euro remained under pressure and hovered around 1.1250 against the USD.  

Hang Seng index rallies strongly above 22,000

HSI Index (Hong Kong Hang Seng I 2015-09-16 08-56-00

There is increasing volatility and nervous trading conditions as investors await key decisions from the FOMC meeting tomorrow. The USD index remains strong after hovering around 95.60 against a basket of currencies. We received fairly disappointing US economic figures yesterday, as both retail sales and industrial production missed analysts’ expectations. However, the US equity markets continued their strong upside momentum ahead of the US Fed meeting. The S&P 500 index rallied over 1.2% towards 1,980, while the Dow Jones increased by 28 points (+1.40%).

Today, the main focus will turn to the release of US inflation data as well as the NAHB housing market index. There is increasing uncertainty ahead of tomorrow’s FOMC meeting decision, while there seems to be no consensus on the outcome. However, US bond yields moved significantly higher with the two-year rate testing the 0.80% level, adding further support to the USD index.   

Precious metal prices rebounded this morning as gold climbed higher to retest $1100/ounce in early trade. Silver followed the uptrend and increased by 0.70% towards $14.50. Crude oil prices extended gains this morning as WTI front month futures rallied over 1.3% above $45/barrel ahead of the release of the weekly EIA oil inventories report.

WTI front month futures climb above $45/barrel

CLV5 Comdty (WTI CRUDE FUTURE  O 2015-09-16 08-58-42

 

Events for today:

0600

JP

Aug

BoJ Monthly Economic Report

0930

UK

Aug

Claimant Count & ILO Unemployment

1000

EZ

Aug

CPI Core

1330

US

Aug

CPI

1500

US

Sep

NAHB Housing Market Index

1530

US

w/e

EIA Energy Stocks

 

All times UK Local Time

More from: Myrto Sokou