While there has not been any new information from the Federal Reserve office concerning the stock index figures, investors have braced themselves for yet another cash in of corporate gains. This higher opening future can be attributed to the fact that market indexes are gaining points; Dow gained 100 points and S&P gained 10.5 points. NASDAQ also rose after it gained 34.5 point
As of this moment, the stock market’s biggest influence is the upcoming U.S. election, but investors’ decisions are also swayed by the Central Bank. There is an ongoing debate on the question of when the Fed will decide to increase the interest rates in the market. This discussion was mainly stirred after a comment from the St. Louis president of the Fed stating that low interest rates will most probably be the dominating figures in the market over the course of the next two, maybe three years.
The U.S. stock market is at a point where the productivity growth rate is low. This, as expected, puts a lot of pressure on investors to withdraw their money from risk ventures and put it into investments that will guarantee safe returns. The only problem is that these safe ventures are limited at the moment. Even worse, safe return rates on investments are low, expected to stay the same for a considerable amount of time in the future. With low safe return rates and low interest rates, both of which are not expected to rise anytime soon, the U.S. stock market is looking very bleak, something that will automatically turn away potential investors.
James Bullard, the St. Louis Fed’s president, made his comment not more than a month after he has cast a vote to maintain the interest rates of the market on the low. Hiking the interest rates may work in favour of the many investors out there, but it will not work in the favour of the Fed and the U.S. Central Bank.
William Dudley, the Fed President in the state of New York is scheduled to comment on the state of the U.S. Treasury market. Many investors are looking forward to this speech so as to get a good prediction angle on the expected returns of their ventures. The Governor of the Fed, Jerome Powell, is also scheduled to speak at the same meeting as Dudley, also commenting on the issue of the Treasury market. Apart from these two, the Fed President of Chicago will also give a speech.
The market is silent. It seems to be crashed between the interest rates situation and the upcoming elections; two factors that have caused an unbelievably huge shift in stocks. There is no new economic data as investors focus their time and energy on the PMI data of the Markit flash U.S.
Moving away from the U.S. market, we find that oil prices have also dropped. The brand WTI sold at $50.23 for one barrel, while the brand Brent went for $51.35 for one barrel. For a market that is usually at the top of the price list, this might be the lowest record for oil yet.
Thanks to the rise registered in the dollar, stocks from Europe traded for higher than usual. The Asia-Pacific market also recorded high trades. U.S. stocks traded on a flat line with no apparent increases or decreases.
Worldwide, stocks are showing weak outlooks. There are several inspired markets, but most of them are predicted to fall within the next few months. CMC markets for instance, showed promising outcomes due to corporate gains given their widespread influence in the market. Investors are fearful of the future of their investments, but brokers use the few good markets to convince them that stocks will recover from the fall in interest rates. The basic problem is the presence of a weak corporate guidance. Different currencies, like the euro and the yen, rated low against the dollar which had risen after a global hike in stocks for the first time in four weeks, but with a predicted rise in U.S. interest rates come December, not to mention the ever-rising tension in the elections, the dollar is sure to lose out as quickly as it rose.