World Market Insights

We are providing below the world market insights which can help you to plan your trade.

- The US market could not sustain the rally after elevated job data unexpectedly accelerated.

- This means that the fed has challenging time to decide on course of rate hike post November policy.

- The Fed most likely to hike rate by 0.75% today.

- The market was to believe final 0.75% hike in November and begin slowing the pace of increases in December.

- US job openings improved to 10.7m in September from 10.3m in August, well ahead of consensus expectations of 10.2m job openings.

- Energy shares rose as oil prices pushed higher on rumours of a potential reopening for China early next year.

- Financials continue to extend gains thanks to better-than-expected earnings from banks and investment banks in the past two weeks.

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UPCOMING EVENTS

2ND NOV. FED POLICY

3RD NOV.BOE POLICY

3RD NOV.RBI POLICY

4TH NOV. US JOB REPORT

8TH NOV. US MID TERM REPORT

10TH NOV. US CPI DATA

NEXT FEW DAYS HIGH VOLATILITY.

The Federal Reserve is expected to raise interest rates by three-quarters of a percentage point Wednesday and then signal that it could reduce the size of its rate hikes starting as soon as December.

Markets are primed for the fourth 75-basis point hike in a row, and investors are anticipating the Fed will slow down its pace before winding down the rate-hiking cycle in March. A basis point is equal to 0.01 of a percentage point.

“We think they hike just to get to the end point. We do think they hike by 75. We think they do open the door to a step down in rate hikes beginning in December,” said Michael Gapen, chief U.S. economist at Bank of America.

Gapen said he expects Fed Chair Jerome Powell to indicate during his press briefing that the Fed discussed slowing the pace of rate hikes but did not commit to it. He expects the Fed would then raise interest rates by a half percentage point in December. 

“The November meeting isn’t really about November. It’s about December,” Gapen said. He expects the Fed to raise rates to a level of 4.75% to 5% by spring, and that would be its terminal rate — or end point. The 75 basis point hike Wednesday would take the fed funds rate range to 3.75% to 4%, from a range of zero to 0.25% in March.

“The market is very fixated on the fact there’s going to be 75 in November, 50 [basis points] in December, 25 on Feb. 1 and then probably another 25 in March,” said Julian Emanuel, head of equity, derivatives and quantitative strategy at Evercore ISI. “So in reality, the market already thinks this is happening, and from my point of view, there’s no way the outcome of his press conference is going to be more dovish than that.”

The stock market has already rallied on expectations of a slowdown in rate hikes by the Fed, after a final 75 basis point hike Wednesday afternoon. But strategists also say the market’s reaction could be violent if the Fed disappoints. The challenge for Powell will be to walk a fine line between signaling less-aggressive hikes are possible and upholding the Fed’s pledge to battle inflation. 

For that reason, market pros expect the Fed chair to sound hawkish, and that could rattle stocks and send bond yields higher. Yields move opposite price.