S&P500
The main US indices rose and posted new highs for the year ahead of the Fed's decision. The Dow, NASDAQ, and S&P500 indices rose 0.4% on Tuesday.
On Wednesday morning the Japanese and Chinese indices were down 0.4% and 0.6% respectively.
Oil was down 1% in the morning. Brent crude was priced at $83.80. According to the American Petroleum Institute, US inventories rose by 3.5m barrels over the week.
The fall in ICE futures price has stopped. Short-term gas prices rose to $850 per barrel. Further price movements will depend on additional deliveries by Gazprom to Europe.
The number of coronavirus cases worldwide keeps rising. On Wednesday, there were 380,000 new cases around the world. In the US, there were 59,000 cases.
The S&P500 index is trading at 4,630 and is expected to be in the 4,580–4,660 range. The US Federal Reserve System will announce its policy decision today. Investors are waiting for the Fed to begin reducing its $120bn growth support programme from this month. It is important for the markets what the Fed says in a statement. Analysts do not expect a Fed rate hike before July 2022. The current rate level is 0.0 -0.25%.
The US market is now at the highs of the year and historic highs. Since the start of the year the S&P500 index has gained more than 22%. However, if the Fed's statements come out harsher than the market expects, the indices could show a fall of up to 2% or more.
A major vaccine manufacturer, Pfizer, has faced problems. The media have published information that the vaccine testing contractor committed numerous gross violations in the trials. However, Pfizer has received approval to vaccinate children aged 5 to 11 in the US. Moderna has problems with possible side effects. Accordingly, the Centers for Disease Control and Prevention will not approve Moderna for the vaccination of children before January.
Pfizer expects to generate $36bn in vaccine sales this year and $29bn in 2022. The company's shares were up 2.6% yesterday.
The US Services Business Activity Index for October will be released today. It is expected to be 62.3%, up slightly from 61.9% in September. There will also be a September employment report from ADP. Employment is forecast to rise by 400K.
USDX is trading at 94.00 and is expected to be in the 93.00–95.00 range. The dollar is near its highest level of the year. It would be reasonable for the currency to strengthen sharply on the back of the Fed's decision. However, market movements can be unexpected, especially if the Fed's decision does not coincide with expectations.
USDCAD is trading at 1.2415 and is expected to be in the 1.2300–1.2580 range. If the dollar strengthens, the pair could rise significantly, to 1.2600.
The US market is waiting for the Fed's decision. A sharp correction in the stock market is quite possible.
