Lukewarm Response to Fed Assembly

In a broadly anticipated transfer, the Federal Reserve (Fed) hiked its coverage rate of interest by 25 basis-point (bp) to the 5.25%-5.5% vary and left the door open for an additional hike in September. However provided that Fed Chair Jerome Powell additionally guided for price selections to be on a “meeting-by-meeting” foundation, extra tightening strikes nonetheless lack dedication at present cut-off date. In gentle of the Fed’s data-dependent stance, together with the broader development of moderating US inflation, Fed price expectations remained agency for an prolonged pause by means of the remainder of the 12 months.

Maybe one thing to maintain on the again of thoughts is that the Fed Chair nonetheless doesn’t see inflation returning to the Fed’s 2% inflation aim till 2025, which can counsel that he foresees a extra arduous course of in pushing pricing pressures down shifting ahead. The abating of base results and a few firming in commodities costs these days might current some potential challenges.

Wall Road managed to pare earlier losses to shut flat for the day, with after-market strikes edging larger on Meta’s outcomes. A beat on all fronts (high and backside line, energetic customers base, common income per person), together with a better-than-expected steering for the third quarter, have been greater than adequate to place a 6.8% achieve in its share value in after-hours buying and selling.

The US greenback have been 0.3% decrease, alongside a downtick in US Treasury yields. One to look at within the commodities area on a extra subdued US greenback could also be copper costs. Costs have been buying and selling inside an ascending triangle sample over the previous two months, with latest retest of the higher trendline resistance on the US$8,700/tonne degree as soon as extra. Close to-term upward momentum is supported by an growing shifting common convergence/divergence (MACD) and relative energy index (RSI) above 50, with any profitable break above the extent probably paving the best way to retest the US$9,000/tonne degree subsequent.

Supply: IG charts

Asia Open

Asian shares look set for a barely optimistic open, with Nikkei +0.11%, ASX +0.54% and KOSPI +0.57% on the time of writing. The Nasdaq Golden Dragon China Index have been up 2.8% in a single day, following a extra lacklustre session within the earlier session, with cautious optimism nonetheless at play for additional follow-through in China’s financial stimulus. Nearer to dwelling, the main target is on UOB’s 2Q 2023 consequence launch this morning.

The financial institution continues to profit from the web curiosity revenue tailwind, with a 31% year-on-year soar within the section uplifting general earnings by 27%, in keeping with forecasts. Web curiosity margin continues to average for the second straight quarter (2.12% from earlier 2.14%), however some could discover consolation within the softer tempo of decline, which might counsel some stabilising above the two% degree for the months forward. Mortgage progress and web charge revenue stays extra subdued with single-digit decline from a 12 months in the past, however so far, administration’s steering could have supplied a optimistic spin on outlook, pointing to some financial resilience within the area. Dividends have been raised to S$0.85/share from final 12 months’s S$0.60/share, probably leaving a ahead dividend yield of 5.5%.

For UOB’s share value, a spot larger this morning has led to a retest of key resistance confluence on the S$29.14 degree. Whereas consumers stay in management, with its MACD heading above zero and RSI sustaining above the important thing 50 degree, a break above the S$29.14 resistance could also be warranted to assist additional upmove to the psychological S$30.00 degree. On the draw back, the earlier consolidation vary on the S$28.45 degree could function near-term assist.

Supply: IG charts

On the watchlist: EUR/USD resting at assist forward of European Central Financial institution (ECB) assembly

Up to now, the EUR/USD has been buying and selling on an upward development, with a collection of upper highs and better lows displayed since October final 12 months. Following a lacklustre exhibiting within the US greenback in a single day post-FOMC, the EUR/USD is discovering an try to stabilise at a near-term assist across the 1.103 degree, with all eyes on the ECB rate of interest resolution later right this moment.

Whereas price expectations have been firmly priced for an prolonged pause from the Fed shifting ahead, the ECB is predicted to maintain mountaineering over the subsequent two conferences. Any validation on that entrance or extra aggressive tone from the ECB may very well be supportive of the pair within the close to time period. With a bearish crossover on MACD and declining RSI pointing to some moderation in near-term momentum, the 1.103 degree must see some defending forward. Failing to take action could pave the best way in the direction of the 1.083 degree as the subsequent line of assist.

Supply: IG charts

Wednesday: DJIA +0.23%; S&P 500 -0.02%; Nasdaq -0.12%, DAX -0.49%, FTSE -0.19%

Article written by IG Strategist Jun Rong Yeap