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Bulls Pause Ahead Of FOMC Announcement, UK Elections Tomorrow, Still No Trade Deal

Trading slows ahead of the FOMC announcement due Wednesday afternoon. No change in policy is expected but the committee’s outlook on inflation could move the market.
Thomas Hughes

The U.S. Market Edges Lower In Early Trading

The U.S. market is edging lower in early Wednesday trading while traders take a rest. The FOMC meeting and policy announcement due out later today is reason enough to pause. The committee is not expected to alter rates at this meeting but its outlook on inflation could move the market.

As of now, most market participants think no change is coming before next summer. Anything to the contrary could move equities and the dollar. The FOMC’s commitment to supporting short-term liquidity markets is also crucial. If the statement fails to reassure investors there will be a major move in the capital markets.

The Dow Jones Industrial Average is bobbing along at break-even levels with the S&P 500 and NASDAQ Composite in tow. In stock news, shares of Children’s Place and American Eagle Outfitters are both moving lower in early trading. The problem is the same for both company, decent earnings for the 3rd quarter but a weak outlook for the holiday period is dragging on share prices. American Eagle is down more than -7.0% in early trading while Children’s Place has shed more than -16%. Lululemon is scheduled to report after the bell and may shed more light on holiday expectations.

EU Markets Are Mixed, Too Much Uncertainty Is In The Air

The EU indices are mixed at midday while traders key in on three major market-moving events of global proportion. The closest to home is the UK’s snap election. The election will happen tomorrow and set the fate for the Brexit. If Johnson’s Conservative Party is able to win the majority Parliament is sure to approve his plan and allow a smooth Brexit to move forward. If not the Brexit will be pushed off again indefinitely unless the EU forces a hard-Brexit.

Elsewhere, the U.S. FOMC meeting is high on the trader’s list of things to watch. The committee’s decision could have a far-reaching impact if the dollar is moved significantly. Topping the list of concerns is the fate of the U.S./China Phase One Trade Deal. Signs have progressed to the point markets believe the deal is close at hand. Despite this, clarity on whether tariffs will or will not be enforced this Sunday is lacking. The DAX and CAC are both up, the DAX about 0.40% the CAC 0.01%, while the FTSE is down about -0.05%.

Asian Market Are Mostly Higher

Asian markets are mostly higher at the end of the trading day Wednesday. The Hong Kong Hang Seng is in the lead with a gain of 0.80% while the Nikkie is the sole decliner. Today’s action is largely impacted by the FOMC and possible outcome of trade talks.

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