No interest rate changes are expected from the US central bank, with traders instead eyeing any commentary from chair Jerome Powell on the outlook for the economy as well as ongoing stimulus negotiations in Washington DC
The FTSE 100 is expected to open on the front foot on Wednesday as traders await any commentary from the final meeting of the Federal Reserve for 2020.
The FTSE 100 is expected to open up 20 points after ending Tuesday’s session 18 points lower at 6,513.
While the Fed is not expected to make any changes to interest rates today or unveil any new quantitative easing, investors will be looking for any commentary on the central bank’s willingness to provide take action should the need arise, particularly with recent data showing signs the US economy could be stalling.
“Fed Chairman Jerome Powell has always been very insistent that further central bank support can be relied upon the support the US economy, but he has also been insistent on the need for further fiscal support from those on Capitol Hill as well”, said Michael Hewson .
“In the wake of the recent weaker US payrolls number, and the sharp jump in weekly jobless claims, there does appear to have been progress in this, with the discussions over a new economic aid package currently expected to yield some form of outcome by the end of this week”, he added.
Expectations of a higher open followed a positive performance for Wall Street overnight, with the Dow Jones Industrial Average closing up 1.13% at 30,199 while the S&P 500 climbed 1.29% to 3,694 and the Nasdaq rose 1.25% to 12,595 amid optimism over stimulus negotiations and COVID-19 vaccinations.
The optimism continued in Asia this morning with Japan’s Nikkei 225 up 0.26% while Hong Kong’s Hang Seng climbed 0.82%.
On currency markets, the pound was trading relatively flat against the dollar at US$1.345, with UK PMI data later today and any developments in Brexit negotiations likely to provide movement catalysts for sterling.