Markets are looking for a signal from Powell that the Fed could pause its hikes in the coming months
Wall Street stocks slipped on Monday as markets participants turned more cautious ahead of the Fed meeting beginning today. The central bank is widely expected to hike interest rates by 75 basis points, while markets are also looking for a signal from Powell that the Fed could pause its hikes in the coming months. The Dow Jones Industrial Average fell 0.39%, to notch its best October on record, the S&P 500 shed 0.75%, while the Nasdaq Composite gave up 1.03%. Investors also continue to focus on third-quarter earnings results, which have mostly beaten forecasts.
Despite modest losses in the US, Asian equities advanced on Tuesday, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.7%. The Nikkei 225 in Tokyo added 0.25% while Hong Kong’s Hang Seng rallied nearly 5% as technology stocks gave s solid boost to the index. Earlier in the day, the RBA raised its cash interest rate by 25 basis points, to the highest since early May 2013. The increase was in line with expectations. In China, the data showed that the manufacturing sector shrank for a third consecutive month in October.
In Europe, equities saw a positive start to the trading session on Tuesday ahead of the Fed meeting. Markets participants also continue to digest the latest economic data out of the Eurozone where inflation soared to a record high in October and growth slowed markedly in the third quarter. US stock index futures edge higher in early pre-market deals as investors await quarterly earnings from Uber, Pfizer and Fox.
The US dollar came under some pressure on Tuesday after four positive sessions in a row. The DXY rallied to 111.67 at the start of the week before retreating during the Asian deals today. Should the downside momentum intensify any time soon, the USD index could fall back below 111.00, with the next support coming at 110.70. However, the bearish potential is limited at this stage as traders await another huge interest rate hike by the Fed. EURUSD bounced back above the 50-DMA to settle above 0.9900 on Tuesday, with parity remaining in the market focus at this stage.
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