Investors are wondering whether the Fed will announce a 75 bps rate hike later in the day
US stocks finished mixed-to-lower overnight after sliding into bear market at the start of the week. Investors await the Fed’ decision after another report showed elevated inflation persists, making the central bank act more aggressively. The Dow Jones finished down 0.5%, the broad-based S&P 500 0.4% and the tech-heavy Nasdaq gained 0.18%. On the data front, the report showed wholesale prices rose 0.8% in May, double the increase in April, adding to inflation worries ahead of the Fed decision.
Asian equities traded mixed on Wednesday, with investors wondering whether the Fed will announce a 75 bps rate hike later in the day. The Shanghai Composite index advanced 0.5% after the data showed that factory activity rebounded last month. Hong Kong’s Hang Seng added 1.14% and the Nikkei 225 in Japan fell 1.14%. Meanwhile, South Korean Kospi fell nearly 2% as the data showed the country’s unemployment rate rose to 2.8% last month. In Australia, the S&P-ASX 200 index shed 1.27%.
In Europe, stocks opened in positive territory today, with investor sentiment improving somehow amid reports that the ECB would hold an unscheduled meeting to discuss the recent sell-off in the bond markets. The pan-European STOXX 600 added 1% in early deals, with banks leading the gains ahead of the ECB meeting. The central bank reportedly to discuss reinvestment of PEPP bonds among other issues.
The dollar came under some pressure as risk aversion abated on Wednesday. Yesterday, the USD index peaked at fresh two-decade highs in the 105.65 area to settle around the 105.00 mark today. The downside potential looks limited in the near term, however, as the Fed is likely to trigger another rally in the greenback if delivers a 75 bps hike later in the day. Otherwise, USD bulls would be disappointed.