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Futures Rise On Fed Hope, Brexit Blocked In UK, RBA Sees Risk And Uncertainty In Global Markets

Thomas Hughes
The Dow Jones snaps a 4-day winning streak

The FOMC Meeting Comes Into Sharp Focus

The U.S. futures were indicated a largely higher opening on Tuesday morning. Investors have turned their focus to an FOMC meeting that gets underway today. The FOMC is not expected to alter policy but there is an expectation outlook will be lowered. The Fed’s dot-plot, a graph of rate expectations among committee members, is expected to show lower expectation for inflation and interest rates over the next two years. The dovish expectation is a boon for equity markets but likely already priced into stocks. Slowing economic growth is not new phenomena.

In stock news shares of Tesla, GM, and Netflix were making big moves in the premarket session. Tesla is coming under increasing pressure from regulators. Enforcement agencies have targetted at the actions of CEO Elon Musk allegedly in violation of court orders. Basically, Musk has not been obeying the letter of his punishment in the wake of last year’s Twitter scandal. Shareholders are also showing concern the once-loved CEO is damaging the company and share prices. Shares of TSLA were down more than -1.0%.

Netflix CEO Reed Hasting’s said that Netflix original content will not be available on Apple’s new streaming service. The company prefers viewers to watch the content on its own platform. Shares gained 0.70% on the news. Shares of GM were also up about 0.70% in early trading. The company stands to make more than $1.25 billion on the IPO alone and could use the money for buybacks or dividends if unloaded.

Brexit Blocked In The U.K., Hard Brexit Looms Closer

U.K. lawmakers have blocked Theresa May from resubmitting her Brexit deal to parliament without significant changes. The blockage comes at the worst possible time. May has only two days left to present the EU satisfactory reason to delay the Article 50 deadline. With the parliament unwilling to deal, and the EU unwilling to re-deal, it looks like the U.K. is in for a hard-Brexit regardless of their wishes.

Most EU bourses were moving higher despite the Brexit setback. The German DAX was leading with a gain near 0.90%. The UK FTSE 100 and French CAC were also both higher but by roughly half the gain posted by the DAX. Autos were in the lead at midday with an average gain of 2.5%. The autos were boosted by merger hopes sparked by word Peugeot was interested in Fiat-Chrysler. Shares of Danske Bank were the big losers in today’s action, down about -5.0% after a 200 billion euro lawsuit was filed by U.S. investors.

Asia Flat; FOMC, Brexit, RBA In Focus

Asian markets were flat on Tuesday as investor eye events overseas. The FOMC meeting and Brexit bring substantial risk to the market and may spark major moves in equities this week. The Hong Kong Hang Seng led advancers with a gain near 0.20% while the Shanghai Composite paced decliners with a loss near -0.20%. In Australia, the RBC meeting minutes were released and confirm ongoing risk to the global economy. The bank cites trade, Brexit, and uncertainty as the biggest risk to Australian economic stability.

This article was originally posted on FX Empire

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