Global stocks rose after the Fed meeting on Wednesday | IFCM
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Global stocks rose after the Fed meeting on Wednesday - 19.6.2014

Global stocks rose after the Fed meeting on Wednesday. As it was expected, there was a reduction of the QE program by $10 billion to $35 billion a month, carried out through emission. We believe that this reduces the liquidity of financial markets.

So, commodity futures, which began to rise at the beginning of last year, have been the first to be corrected recently. However, the QE3 reduction has not had a negative impact on the stock market yet. Yesterday investors reacted with significant long positions with shares on the Fed's statement that the low level of interest rates (0-0.25%) would continue for a long time, even after the redemption of government bonds is ended. However, they did not take the negative factor in form of lower Fed forecast for the U.S. GDP growth in 2014 from 2.9% to 2.1-2.3%, projected earlier. Now the consensus of market participants regarding the Fed rate is as follows: it will remain at the current minimum level before the end of the year and will increase to 1.2% by the end of 2015 and to 2.5% by the end of 2016. Yesterday's trading volume on the U.S. exchanges was 3% higher than the monthly average and is amounted to 5.94 billion shares. The S&P500 and the MSCI All-Country World global stock market index set another record high. The Volatility Index, calculated by Chicago Board Options Exchange updated its low since 2007 and closed at 10.61 points. It is only two points above the minimum of 1993. The strong technical indicator decrease suggests that the trend movement occurs without any significant corrections and usually precedes the trend change. The Federal Reserve Bank of New York Chairman William Dudley said that the low volatility, of course, pleases investors with low risk, but personally it "makes him a little nervous". Today we will see weekly labor market data in the U.S. at 12-30 CET and the leading indicator for May and Philly manufacturing at 14-00.

European stocks rose along with the global market. They were also supported by the positive construction indicators for April. There is no macroeconomic information in the Eurozone expected for today.

Nikkei

Japanese Nikkei rose and went out of the neutral trend upwards. In addition to the positive from the global stock markets there was good news from China. The local government approved the measures to stimulate the GDP growth to 7.5% in 2014. By the way, this message also helped certain commodity futures. Yesterday’s Japanese macroeconomic indicators were in line with the forecasts, and the next forecast will be shown up only on June 27th. Note that the Bank of Japan reduced the asset purchasing program via emission by the Fed example. Note that this decrease was not significant and it concerned only long-term government bonds.

Silver

The prices of Gold and Silver increased significantly on the background of the planned abolition of the daily fixing. This is what we wrote in yesterday's review. The story goes on. The World Gold Council is planning to conduct a forum on July 7 for further discussion of the gold fixing abolition. The demand for physical metal in India and China has not yet increased. In particular, the premium between the prices in India and the UK is on the 4-month low. The annual volume of the world Silver market is estimated at $5 trillion, the Gold at $18 trillion. It is assumed that the new rules would increase transparency.

The Wheat comes more expensive for a second day in a row amid fears that the rainy weather in Oklahoma and Kansas may spoil its crop in the United States. Previously, the drought has increased its price by 15%, but then it almost returned to its previous level. Note that the next USDA Grain forecast will be released on June 30. Recall that the Ministry report on June 15, had noted that 63% of winter wheat crops are in "bad or very bad" conditions. The crops was only 45% last season.

Coffee

The

Coffee price slightly decreased on the competition between the two major Asian producers such as Indonesia and Vietnam. Its crop in Indonesia is estimated at 8.9 million bags and at 29.2 million bags (60 kg) in Vietnam. Indonesia expects the increase of its share in the global market. Vietnam sells Coffee at a discount $5-10 per ton compared to its price in London.

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