Central banks in focus this week
US equities closed higher on Monday as investors awaited fresh monetary policy guidance from the Federal Reserve. The Dow Jones climbed 0.2%, the S&P 500 gained 0.63%, while the Nasdaq Composite advanced 0.82%. After two weeks of tech-led losses for both the S&P 500 and Nasdaq Composite, tech giants were leading the gains at the start of the week, with Nvidia shares adding 0.7% on the first day of the company’s GTC Conference. Shares of Alphabet rallied more than 4.5% amid the reports that Apple was in talks with Google to include the company’s Gemini AI in iPhones.
In Asia, stocks finished mixed on Tuesday as investors turned more cautious after the Bank of Japan meeting. The central bank hiked interest rates by 0.1% its first such move in 17 years. The bank also signaled an end to its yield curve control policies. At the same time, the Bank of Japan said that that monetary conditions will remain largely accommodative amid persistent concerns over weakness in the country’s economy. After the initial dip, the Nikkei 225 managed to shrug off weakness to finish 0.66% higher. Elsewhere, Australia’s ASX 200 rose 0.36% after the Reserve Bank of Australia kept interest rates steady, as expected.
European equities opened lower today as global investors look ahead to the start of the US Fed’s two-day policy meeting. Fed funds futures forecast a 99% likelihood that the central bank will leave benchmark interest rates unchanged on Wednesday. The pan-European Stoxx 600 was down 0.1% in early deals. Regional indices continue to consolidate at recent highs for the most part. US stock index futures are holding slightly lower in early pre-market deals, with Nasdaq futures down 0.3%.
In currencies, the US dollar stays bullish, holding just above the 104.00 figure for the first time in two weeks. The greenback has been trending north since last week, with bullish pressure persisting in anticipation of the Fed decision. Traders expect the central bank to deliver a hawkish tone on the outlook for rate cuts, suggesting the dollar could extend the ascent after the meeting. Should monetary authorities disappoint, however, the USD index may retreat substantially from the current levels. In the near term, a decisive break above 104.00 would pave the way towards the 104.30 zone that capped gains in early March.