Welcome to the 13-06-2018 AFTERNOON UPDATE. We are one day after the historic meeting between US President Donald Trump and North Korean leader Kim Jong-un and there is no enthusiasm on the most important stock exchanges in Asia and Europe. Instead, investors are more likely to wait for news from major central banks.
In the run-up to the US Federal Reserve’s (Fed) rate decision, Italy’s Europe-friendly tones have eased the strain on investors. There was also a friendly opening on Wall Street as well. I mentioned this morning in the article that expectations are for the Fed to announce the raising of the key rate by a quarter of a percentage point from 1.75% to 2%.
13-06-2018 AFTERNOON UPDATE. So we believe that the market has already priced this in. Markets are therefore anxiously waiting to see if there will be any signs of ‘further’ rate hikes. The recent rise in inflation should have increased pressure on the Fed and perhaps provided enough pressure for them to increase.
In addition, attention turned to Italy. Investors reacted relieved to the statement of the Italian EU Minister Paolo Savona saying that the euro was “indispensable”. From other members of the government these such statements would be normal, but from Savona, however, they are remarkable.
The 81-year-old former Professor Savona once called the common currency a “historical mistake”. Investors took hold of Italian stocks: the leading index in Milan has been one of the biggest winners in Europe today. As well as their government bonds.
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At the European Central Bank (ECB) meeting on Thursday, meanwhile, a groundbreaking debate is emerging over its multi-billion dollar asset purchase program. And don’t forget that on Friday we have the Bank of Japan (BoJ) rate meeting.
Fed boss Powell will already be aware of the developments that will take the rate cycle out of autopilot, such as the impending trade war or the consequences of the tax reforms. Learn more about the DAX. Thanks for reading the 13-06-2018 AFTERNOON UPDATE
13-06-2018 AFTERNOON UPDATE
