Fed Meeting on Wednesday, US Markets Expected to Be Cautious

With a Federal Reserve meeting due this Wednesday, it is highly likely that US markets will be cautious ahead of the meeting and the dovish comments expected from Janet Yellen.

Prime Asset Capital

Fed Meeting on Wednesday, US Markets Expected to be Cautious

US indexes are expected to be cautious early this week ahead of the Fed meeting which is expected to offer a good insight into their take on the US economy.

The Fed meets on Wednesday and although no rate increase is expected we will receive their take on the US and Global economies. Last December was the most recent rate hike and speculation that 2 to for increases were due this year have kept the broadsheet awash with opinions.

What we do know is that the US economy is moving along nicely. The USD continues to draw strength against a basket of currencies and the US markets look to be immune to concerns over the Eurozone and the low price of oil.

With the first quarter earnings season offering up quite a mixed bag of reports and plenty of companies coming in above expectations there can be only one real assumption. That the US economy is recovering better than the Federal Reserve would like to admit.

The S&P 500 has pulled back the losses seen earlier in the year despite a host of less than impressive earnings reports. The top 500 may have seen less profits than the previous year but they still beat analysts calls and this is partly why the Federal Reserve will remain dovish this week.

Whilst the US Shale Industry has been making huge profits over the past few years, the current low oil prices are only starting to take an effect on US reserves. With reserves close to all-time highs and low pump prices, retail spending and employment all going in the right direction, the US economy is certainly the best performing globally.

Concerns in Europe about the UK leaving, issues with Greece’s bailout program and Italy already shoring up its banks, the US markets will look to capitalize on the current climate and the Federal Reserve with Ms. Yellen at the helm won’t look to spoil the apple cart any time soon.

If a rate hike is to happen this year it would be fair to say that towards the end of the year there might be room for 1 or 2. Most definitely not before the UK and Europe have worked out their directions.

US Market Closes 22nd April 2016:

S&P 500 – 2,091.88 +0.10 (+0.00%)

Dow Jones – 18,003.25 +21.23 (+0.12%)

NASDAQ - 4,906.23 -39.66 (-0.80%)

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Source: Prime Asset Cappital


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