Spreadex Market Update
Markets a Little Jittery Ahead of FOMC Today
Equities Traders Brace for FOMC
Equities were higher across the board yesterday as a weaker US Dollar kept risk assets underpinned. The FOMC later today is the main event to watch with equities seeing a mostly softer start ahead of the decision. If the Fed opts for a smaller hike, as expected, and is seen dialling back the hawkishness of its outlook, this should help drive a further rally in equities prices near-term with attention then shifting to the ECB and BOE meetings due tomorrow. Any surprise hawkishness from the Fed, however, will see equities come under heavy selling pressure.
US Earnings Continue – Meta Up Next
ExxonMobil shares popped higher yesterday as the company reported record profits in 2022. Despite a dip in revenues in Q4, EPS was higher than expected helping underpin the stock. Shares in Spotify gapped higher and continued higher over the session despite the company undershooting both EPS and revenues forecasts. Seemingly investors were buoyed by news of record new subscriber growth with 33 million new accounts joining in Q4. Today, the focus is on Meta which is due to report Q4 EPS of $2.259 on revenues of $31.55 billion.
AUD Rallies Amidst Risk-On Backdrop
The bounce back in risk appetite has seen AUD swinging back into demand with the currency the best performer over late Asian and early European trading on Wednesday. If the Fed does mark a further pivot on rates today, this should help driver AUD higher still, provided the outlook contains no hawkish surprises.
GBP Weaker Ahead of BOE Tomorrow
GBP has been the weakest performer so far today as traders brace for a potential pivot from the BOE tomorrow also. On the back of recent comments from BOE governor Bailey, regarding the UK economy as having turned a corner, there are downside risks into tomorrow’s event. Regardless of the size of tomorrow’s hike, traders will be looking for a signal that BOE tightening has likely hit its limit for now.
Metals & Oil Bounce Back
In the metals and commodities space, gold and silver both rebounded off the lows yesterday to end the day in the green as USD weakened in response to softer-than-forecast CB Consumer Confidence data. Today, both metals look poised for further upside should USD weaken on the back of the Fed. Crude prices turned sharply higher yesterday amidst the broad pick up in risk appetite. With prices in the green today also, the market looks set for further gains should USD weakness deepen. Traders will also be looking to the latest EIA report today, forecast to show a 1 million barrel drawdown.
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