CM – LONDON MARKET EARLY CALL: US Federal Reserve talks on throttling are dampening sentiment

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Morningstar.co.uk contains data, news and research on stocks and funds, unique commentary and independent Morningstar research on a wide range of investment products, as well as portfolio and asset allocation tools to help you make better investment decisions. </ (Alliance News) – London is lowering on Thursday after a bloody afternoon meeting on Wall Street on Wednesday following the "drama" of the US Federal Reserve's minutes of meetings in July.

IG futures indicate that the FTSE 100 index will open 78.52 points at 7,090.80 on Thursday. The blue chip index closed 11.79 points, or 0.2%, at 7,169.32 on Wednesday.

New York stocks ended lower on Wednesday after minutes of the Fed’s monetary policy meeting in July showed that a reduction in monthly security purchases could begin as early as this year.

The Dow Jones Industrial Average and S&P 500 each lost 1.1%, while the Nasdaq Composite closed 0.9% lower.

Oanda analyst Jeffrey Halley said, “The FOMC minutes were released overnight caused some drama as committee members tended to endorse tapering quantitative easing sooner rather than later.

« While caution has been expressed about the potential impact of the Covid-19 Delta option on recovery, most of the discussion seems to have centered on timing. The views were divided from the end of the year or the beginning of the next year. For me it is rather divisive whether the tapering starts at the end of Q4 or the beginning of Q1, which makes little difference; The fact is, the Fed is likely to start tapering in a few months. « 

At the monetary policy meeting that ended July 28, all members of the Federal Reserve’s Open Market Committee stated that the US economy had been in a hurry since adopting the Guidance for monthly US Treasury bonds of $ 120 billion in mortgage-backed security purchases in December.

Investors now generally expect Fed Chairman Jerome Powell to make an announcement on tapering in the next few months, with the process likely ahead Will begin at the end of the year.

The rough session from New York carried to Asia. In Tokyo, the Nikkei 225 index fell 0.7% on Thursday. In China, the Shanghai Composite lost 0.3% during the Hang Seng index in Hong Kong was down 1.2%. The S&P / ASX 200 in Sydney lost 0.4%.

« The release of the FOMC meeting minutes on Wednesday, which took a more restrictive view of the massive incentives for the US -Economy v found sentiment down, « said Naeem Aslam, Avatrade’s chief market analyst.

“The Fed’s ultra-loose monetary policy, which has been in place since 2020, has helped financial markets by lowering bond yields. However, the shift towards tighter monetary policy suggests that the central bank is unlikely to do the same to investors in the near future Liquidity will be available. « 

The minutes caused the dollar to rise overnight. The pound was trading at $ 1.3715 early on Thursday, down from $ 1.3750 at Wednesday’s stock market close in London. The euro was at Quoted at $ 1.1677, up from $ 1.1705.

Halley of Oanda said, « The procession of FOMC Fed officials who have made aggressive comments since the FOMC meeting, especially after the blockbuster salaries outside of the country Agriculture, which was released in early August, seems to increase the likelihood of a reduction in December. The Jackson Hole Symposium next week could give the markets more visibility via di It provides the Fed with the current mindset, and if not, the FOMC meeting in September will certainly do so. « 

Brent oil was trading at $ 67.27 a barrel on Thursday morning, up from $ 68.75 late Wednesday. Gold traded at $ 1,777.90 an ounce, down from $ 1,779.25.

« Oil prices have been down over the past five days, down nearly 1% on Wednesday. Concerns about dampening demand expectations due to an increase in coronavirus cases worldwide have contributed to the decline. The rise in the dollar index following the release of yesterday’s FOMC minutes of meetings has added downward pressure, « Aslam said.

Thursday’s economic events calendar includes the latest US jobless claims at 1330 BST.

The UK corporate calendar on Thursday includes annual results for Grosvenor casino operator Rank Group and interim results for Chilean copper mining company Antofagasta and lender OSB Group, the former OneSavings Bank.

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