The Federal Reserve policy decisions is this week
European stocks largely flat after Tuesday’s mixed market
A dovish Fed could trigger selling and present new buying opportunity says analyst
Markets across Asia opened higher on Wednesday, with currency markets looking to continue recent stability ahead of the US Fed meeting.
While most global shares remained near record peaks, the investor community is largely focused on the policy decisions likely to come out of the Fed meeting. It is expected the main statement will be on the potential easing of the US’ multi-billion-a-month stimulus spending.
Also key to investors is considerations of whether the meeting will end with a comment on potential interest rate hikes in 2022.
European stocks largely muted
UK’s FTSE index opened 20 points lower at 7,253, or 0.29% in red, while the DAX has shed 10.6 points as of writing to stand at around 15,944. A look at the rest of the market shows France’s CAC 40 is losing 0.2 points at 6,928 while the Swiss Market Index has shed 15 points at 12,305.
In the US, stocks are also expected to open flat, while the Asian markets are looking to close lower after a mixed morning session.
A dovish Fed would provide a buying opportunity
Market strategist Anik Sen, the Managing Director and Global Head of Equities at PineBridge Investments says the market setup presents a buying opportunity, mainly for US stocks.
Sen points to the earnings season seeing several companies post beats, with issues on sales and revenues given analyst upgrades for 2022.
On Tuesday, CNBC’s Jim Cramer shared the same sentiment, telling investors that any declines seen after the Fed statement would be a “buy-the-dip” opportunity.
According to Cramer, a sell-off may ensue from investors eyeing a hawkish comment from the Fed regarding inflation.
“If this market goes down tomorrow thanks to the wrath of the rich, who blame Jay Powell for nicking their [municipal bonds] and their mansions, then you need to view that as a buying opportunity and jump on the best themes,” Cramer noted.
The Fed’s next step following the two-day meeting is big news in the market, with investors likely to view an expected easing of spending as a bullish signal for the coming months.
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