Investors look ahead to rate hikes with fed tapering plan all but certain

- A + A KUALA LUMPUR (Aug 18): The ringgit ended at its lowest since early January 2017 against the US dollar on Thursday (Aug 18), as risk-off sentiment gathered pace after the US Federal Reserve’s July meeting minutes suggested that the trend toward higher interest rates would continue. The Fed said inflation remains high despite aggressive rate hikes, reaffirming its plans to continue raising interest rates to combat elevated inflation. This is keeping the greenback more buoyed, boosting the US Dollar Index by 106.736 points. The latest data also showed signs of slowing economic activities, with the safe haven currency projected to remain in demand. Investors will closely monitor next week’s Jackson Hole symposium for further clues. At 6pm, the local currency dipped to 4.4720/4750 against the greenback, from Wednesday’s close of 4.4660/4685. The ringgit was traded mixed against a basket of major currencies. It fell against the Singapore dollar to 3.2371/2397 … [Read more...] about Ringgit eases further on Aug 18 as risk-off mode remains after Fed’s minutes

Expectations for the Federal Reserve’s next interest rate hike at its upcoming meeting in September have shifted following yesterday's release of minutes from the Fed's July meeting. Ahead of the release, traders had been evenly divided between an increase of 50 basis points (bps) and an increase of 75 bps, according to CME Group, based on fed funds futures data. However, after the release of the minutes, a majority of traders were betting on a 50-bp increase at the meeting. In the minutes, Fed officials signaled that while they would continue to hike interest rates to bring down inflation , it “would likely be appropriate at some point to slow the pace of policy rate increases.” Some officials indicated that once the policy rate had reached a sufficiently restrictive level, it would be appropriate to maintain that level for some time to ensure that inflation was firmly on a path back to the Fed's target rate of 2%. Policymakers also acknowledged the risk of overdoing … [Read more...] about Rate Expectations Shift Following Fed Meeting Minutes

Make that four weeks in a row of gains for the U.S. stock market, as the rally has become undeniable. The S&P 500 and the Nasdaq both climbed more than 3% last week, with the the Dow up 2.9%. The S&P 500 has now climbed 15% from its lows in mid-June, while the Nasdaq has clawed back 20% since then. That could technically be described as a new bull market for the index. A 20% retracement from a recent low fits the bill—or the bull—but there are a lot of opinions about that. But we can't deny the strength of the rally, especially when we dig into the charts. The average stock in the Nasdaq Composite index is up 34% from its lows. Remember, just a few months ago, we were talking about the average Nasdaq stock being down 50% from its highs. The pendulum has swung back in a big way. Across the market, the breadth thrust has been pretty impressive. And no, that's not a swimming stroke. The breath trust indicator is a technical indicator used to ascertain market momentum … [Read more...] about Going Back to School with Stock Market Fundamentals

The January effect was in full effect for the first month of 2019. After a punishing December, stocks rebounded in the first few weeks of January as signs of progress in the U.S.-China trade war appeared, the Federal Reserve adopted a more dovish tone on interest rates, and earnings season revealed that some companies and sectors have more-positive outlooks than expected. It was a month to remember: The S&P 500, up 7.8%, had its best January performance since 1987, and its biggest monthly gain since October 2015. The DJIA rose 7.17% in January, its largest one-month rise since 2015 and biggest January gain in 30 years. Crude oil prices had their best month on record, surging more than 19% after three straight months of losses. Output cuts and the chaos in Venezuela, had a lot to do with that performance. The U.S. added 304,000 jobs in January, blowing out expectations despite the shutdown. While stocks have rebounded, notably for U.S. companies and indexes, risks … [Read more...] about What to Expect for the Markets in February