Asian markets are building further gains today on the back of a positive run which we had on Wall Street yesterfay. Crude oil was very much under the focus after the stellar rally. The move was primarily based on the back of the speculations that perhaps the supply will be disrupted due to the ongoing unrest in Libya.
However, we do believe that what is really driving the sentiment is the fact that a number of companies have announced publicly about their CAPEX cut in their oil projects during their earning reports. This is obviously going to make a dent on the supply curve and this is pushing the price of oil higher. The crude inventory data which is due later in the afternoon, will be another important piece of information which could impact the price of oil.
Back in the US, it was the energy sector which leads the gains for the indices and the sector is having its fifth consecutive day in green territory. The tech sector also made some noise and this helped the Nasdaq index to eke out some gains. The index topped its previous record close which was set back in 2000 and closed at 4719.05.
Today is an important day in terms of economic data for the US and we also have a raft of speeches from the US Fed officials. Investors will try to draw some conclusion about the mind set of the Federal Reserve Committee and their possible reaction. The Fed president, Janet Yellen has reiterated her message over and over that the Fed are standing pat to raise the interest rate this year and their last opportunity to deliver on this will be in December.
Therefore, if we do get the same consistent message today during the slew of these speeches, the odds of the Fed raising the interest rate in December will anchor even further which are currently standing at 50 percent. The Fed could always use the approach of get it done. They could raise the interest rate by any small amount and then stay on sidelines to observe the economy.
We do think that if the Fed do hike the interest rate- the most appropriate strategy for them to adopt will be the one which we have discussed above. Janet Yellen will testify infront of the House Financial services Committee on bank regulations and supervision at 10 AM New York time. William Dudley, the New York Fed is scheduled to speak later in the afternoon and his view on the domestic issues will also be observed very closely. Finally, Stanley Fisher, the Fed vice chairman will deliver his speech at 7:30 PM ET.