Macro economics

Analytics on 28.07.2021. Global markets steady ahead of Fed decision

Wall Street stocks pulled back from record highs overnight as investors awaited a Federal Reserve meeting outcome. As regulatory crackdown in China continues to weigh on market sentiment, Asian equities finished mixed-to-lower on Wednesday. Market players worry about possible new action by Beijing.

In Europe, stocks opened mixed on Wednesday before turning marginally positive in recent trading. In individual stocks, German lender Deutsche Bank rallied nearly 4% after it delivered a better-than-expected quarterly profit. It also raised its revenue guidance for 2022.

On the negative side, the U.K. reported its highest death toll from the virus since March despite falling cases, making investors worried about the outlook for economic recovery in the region. Still, the UK Prime Minister Boris Johnson said that a travel corridor between the UK and US for free movement is being considered.

Against this backdrop, the UK FTSE 100 adds 0.21% to 7,010, Italy’s FTSE MIB gains 0.61% to 25,238, France’s CAC 40 advances by 0.83% to 6,585, while the German DAX 30 rises 0.29% to 15,563. U.S. stock index futures were slightly lower in early pre-market trade, with investor focus shifting towards the Federal Reserve two-day policy meeting outcome.

In currencies, the USD index reversed the recent decline and regained the 92.50 area as US 10-year yields rebounded past the 1.25% level. Still, a cautious tone will likely prevail among market participants ahead of the upcoming FOMC event that could set the tone for dollar pairs later today. A hawkish tone by Powell may push the greenback higher across the board.

Elsewhere, gold prices have been steady this week, treading water around the $1,800 figure. The bullion struggles for direction as traders express a cautious tone ahead of the outcome of the Federal Reserve meeting. The precious metal is clinging to the $1,800 figure, a decisive break above which would pave the way to the 200-DMA, today at $1,821. However, should the dollar rally following the Fed meeting, the bullion would come back under selling pressure.

Nathan Lambert, Head of Global FX Analytical Department

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Interest rates

Country Rate Value
USA Federal Funds 0,25 %
Switzerland 3 Month LIBOR Range -0.75 %
United Kingdom Repo Rate 0,10 %
EU Refinancing Tender 0,00 %
Japan Overnight Call Rate -0,10 %
New Zealand Official Cash Rate 0,25 %
Australia Cash Rate 0,25 %
Canada Overnight Rate Target 0,25 %
All rates
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