The central bank is likely to reiterate its higher-for-longer stance on rates
US stocks regained some ground on the last day of October to recover marginally from recent losses. Equities posted their third-straight losing month. The S&P 500 climbed 0.65%, the Nasdaq Composite added 0.48%, and the Dow Jones advanced 0.38%. For the month, the tech-heavy Nasdaq declined 2.8%. In individual stocks, Caterpillar gave up more than 6% after the company said its fourth-quarter revenue would only be slightly higher than the year-ago period. Now, investors are cautious as the Fed is set to release its next decision on interest rates later in the day. The central bank is widely expected to keep rates at current levels.
Asian equities were mostly rangebound on Wednesday in anticipation of a Federal Reserve rate decision. The bank is likely to reiterate its higher-for-longer stance on rates. Meanwhile, the Bank of Japan signaled few changes to its ultra-dovish policy today. The bank decided to only slightly widen its yield curve control policy, while investors hoped for a more aggressive move. Following the decision, the Nikkei 225 rallied nearly 2.5%. China’s Shanghai Composite index gained 0.14% even as a private PMI survey showed an unexpected contraction in manufacturing activity through October.
In Europe, stocks opened marginally higher after the more positive showing in US stocks yesterday. Regional markets logged the worst monthly performance in over a year in October. Investors continue to digest fresh economic data. The report on Tuesday showed that Eurozone inflation fell to a two-year low of 2.9% in October versus 3.1% expected. On Wednesday, US futures have pared earlier losses for the most part, with S&P 500 futures now just below the flat-line. Still, investors continue to keep an eye out on the bond market after the recent rise in Treasury yields.
Meanwhile, the USD index bounced strongly on Tuesday, retaining a mild bullish bias today. The greenback briefly derailed the 106.00 support zone to attract renewed demand that lifted the prices back to the 106.80-106.90 key near-term barrier. Should the Fed add to a bullish tone by a relatively hawkish rhetoric on rates, the dollar may try to challenge the resistance on the way towards the 107.00 mark. On the downside, the immediate significant support arrives at 106.30, followed by the 106.00 mark.
