Equities are taking stock ahead of the Federal Reserve’s policy decision due later Wednesday. Asian stocks are mixed after Wall Street’s retreat overnight, although US futures are showing gains at the time of writing.
The Nasdaq 100 however breached the 10,000 mark for a historic first, as the top 20 Nasdaq stocks such as Amazon, Apple and Microsoft continue to lead gains and take a larger share of the benchmark.
Global stocks have added US$ 22 trillion to its market cap since hitting a four-year low on March 24, with the unprecedented amounts of monetary policy support making its way into the financial markets. With equity investors evidently taking stock ahead of the FOMC meeting, investors will be wondering if the Fed will give stocks fresh reasons to continue its seemingly relentless climb.
Although the FOMC is unlikely to alter any of its policy settings this week, with US interest rates already near zero, Fed chair Jerome Powell may provide clues on the outlook for US monetary policy and the central bank’s lending programmes to help American businesses weather the challenges ahead. The central bank is expected to reiterate its pledge to continue supporting the US economy in this post-lockdown era, and such dovish tones should provide the platform for further gains in stock markets.
Global investors will also be eyeing the Fed’s targets for growth and employment, in light of last Friday’s positively shocking US May non-farm payrolls report. However, Powell isn’t expected to get carried away by that one single print, but stick to his cautionary tone over the trajectory for growth and employment. At least the weaker Greenback can help alleviate the pressures on the world’s largest economy, with the Dollar index now drawing much closer to that 96 psychological level after weakening almost every day since May 25.
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