Ahead of the highly anticipated Fed interest rate decision, investors on Wall Street stayed under cover. The Dow Jones Industrial fell back in the course of trading to 30'465 points and closed at 30'706 points, -1.01% lower than the previous day. The S&P 500 fell -1.13% to 3'855 points and on the Nasdaq, the indices lost about -0.85%. The Federal Open Market Committee (FOMC) is most likely to raise the key interest rate again tonight at 20:00 (CET). The question is how big is the step this time – 75 or even 100 basis points? The background is the stubbornly high inflation. Although the inflation rate in the US fell in July and August, it fell less than expected and remained at a high level. The question is also how much the Fed's aggressive turnaround on interest rates will slow the world's largest economy. Technically, the US economy is already in recession after two negative quarters. In this regard, every word of Fed Chairman Jerome Powell at the following press conference (20:30 CET) will also be weighed on the gold scale. In the bond market, the yield on the benchmark ten-year US Treasury bond held at the recent level of 3.57%.
Stock markets in the Asia-Pacific region also declined in the majority at midweek, following the negative guidance from New York. In Tokyo, the Nikkei 225 trades around -1.2% lower and in Hong Kong. The Hang Seng Index loses around -1.5% with the Hang Seng Tech Index down even -2.5%. On the Chinese mainland, the Shanghai Composite and the Shenzhen Component trade around -0.5%, respectively -1.2% lower shortly before the close. The MCSI index for Asia-Pacific equities outside Japan trades a daily minus of about -1.1%.
Sweden's Riksbank stepped up its fight against high inflation by raising interest rates by a full percentage point. The rate hike was thus larger than the 75 basis points expected by analysts on average. After the third interest rate hike this year, the key rate now stands at 1.75%. Inflation in Sweden recently rose to just under 10%.
German producer prices rose by +45.8% in August on an annual basis – the survey in 1949 – which means that price buoyancy has once again strengthened significantly. In July, annual inflation here was +37.2%. On a monthly basis, prices at the producer level also continued to rise significantly by +7.9% (consensus +2.4%).
|16:00||US||Existing Home Sales (August, m/m)||-5.9%|
|20:00||US||FOMC Monetary Policy Announcement||2.5%|
|20:30||US||Fed Press Conference|
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Editor: Alessandro Fezzi, E-Mail: email@example.com
Source: LGT Bank (Switzerland) Ltd.
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