Summary:
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US session to be dominated by Fed decision (7PM BST)
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25 bps cut expected; dot plots and Presser could hold the key
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S&P500 within 1% of all-time high (3029)
The forthcoming session could be a major one for equities with the latest monetary policy decision from the US central bank having the potential determine the path of least resistance for the foreseeable future. Given that the Fed are widely expected to deliver another 25 bps cut to their funds rate, the accompanying statement (in particular the dot plots) and any unexpected comments during the press conference from Chair Powell are the most likely sources of volatility. (Read our full Fed preview here).
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The last 2 days have seen bullish hammers on the D1 candles and with the gap lower from 3007 filled last night, a positive reaction to the Fed later could see the S&P500 push back up to its record peak at 3029. As long as the weekly low of 2981 isn’t breached then the chances of a sustained move lower are remote. Source: xStation
Moves in the Oil price remain a key theme for general risk sentiment for the time being, with the huge move higher after the attacks of Saudi outlets over the weekend weighing on stocks at the start of the week. However, the selling has been pretty contained and as the price of Oil has pared back the spikes, equities have recovered.
Therefore indices traders may keep an eye on the Oil markets this afternoon with the weekly inventories due at 3:30PM (BST). While the release on US stockpiles is normally the biggest of the week for Oil markets, at the moment any further developments in the Middle East takes precedence and an update from the Saudi defense ministry in a news conference at 15:30PM (BST) is worth keeping an eye on.
Donald Trump has taken to social media to declare that he plans to substantially increase sanctions on Iran. This has caused minimal market reaction and could be seen one of either two ways. On first viewing it appears to be reflective of growing tensions in the region but I suppose it could in fact perhaps be seen as a sign that the US prefers to weigh into this issue with sanctions as opposed to military force. Source: Twitter
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