FOMC Disappoints Market, Central Banks Eye Trade, U.S. Data Comes In Strong

Global markets are cautious following a round of less dovish than expected central bank meetings.
Thomas Hughes
U.S. Federal Reserve FOMC

The U.S. Market Edges Lower In Early Trading

The U.S. futures market is indicating a slightly lower open on Thursday after the FOMC delivered a weaker than expected outlook for aggressive rate cuts this year. The FOMC cut rates on Wednesday as expected but failed to assure future cuts were coming. Based on the opinions of individual members the market should not expect any more cuts this year unless economic conditions change. Today’s economic data was stronger than expected and reinforces the Fed’s hawkish tone.

In economic news, the Philly Fed’s Manufacturing Business Outlook Survey fell less than expected to 12.00. The decline is due to mixed readings among the sub-indices. All sub-indices are positive but new orders fell and prices rose. On the labor front, initial jobless claims rose only 2,000 over the last week. the initial claims figure is 208,000 and trending just above the 5-decade low. In other news, the OECD has downgraded its target for global GDP to a post-financial crisis low.

Traders will be alert for news on the trade front. the U.S. and Chinese delegates are meeting for deputy-level talks today in Washington.

European Stocks Edge Higher

European markets are edging higher on Thursday following the latest round of central bank meetings. In addition to the FOMC, today’s news includes the BOE and BOJ. The BOE decided to hold its rates unchanged but left the door open to stimulus should the Brexit require it. The BOJ was also content to leave its rates unchanged but said it could cut them as soon as next month. Currencies were moving across the board but the moves were small and left the Dollar Index range bound.

In stock news, shares of IG group advanced more than 8.0%. The trading exchange operator says it will return to revenue growth this year. Shares of NEXT are also on the move but in the opposite direction. The clothing retailer reported better than expected first-half results but says the first weeks of the fall season have not been strong.

Asia Moves Higher, Hong Kongs Moves Lower

Most Asian indices were moving higher at the end of the session on Thursday. The Nikkei, Shanghai, ASX, and Kospi all posted gains in the range of 0.40% to 0.50%. The Hong Kong Hang Seng is the one index to fall in today’s session and it shed more than -1.05%. Shares of insurer AIA led the decline with a loss of -3.0%. In Australia, economic data shows unemployment ticked higher in the last period but less than expected. In other news, shares of Korean index heavy-weight Samsung saw its shares fall -3.0%.

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