20.09.2016 - Investors are waiting for strong movements in the coming days
US stocks slightly changed yesterday amid the lack of vital statistics and the expectation of the Fed's statement on monetary policy, which will be published tomorrow. According to our estimates, the monetary policy settings remain unchanged, but the head of the Fed's rhetoric is likely to be hawkish and increase the likelihood of higher interest rates before the end of the year, which is negative for the stock markets. Today, the focus will be on the data on the number of housing starts and the number of permits for construction of new houses (12:30 GMT). The activity will be restrained by the expectation of the results of the meeting of the Federal Open Market Committee. Our medium-term outlook remains negative and we expect the beginning of the fall in the near future.
European stock indices show a moderate optimism on expectations the Bank of Japan's and the Fed's statements on monetary policy, which may adversely affect the investors' expectations regarding the growth prospects for the European stock markets. In addition, tomorrow will be published quarterly report on the state of the UK economy, which can also lead to strong movements on the market. According to our estimates, it will increase volatility on Thursday as investors will assess the rhetoric of the Fed regarding further plans to tighten monetary policy. Our medium-term outlook remains negative and we are waiting for a strong movement this week.
Markets in the Asia-Pacific region continued to consolidate in anticipation of the statement of Bank of Japan on monetary policy. We look forward to keeping interest rates at 0.10%, and the volume of asset purchases at 80 trillion yen per year. On the other hand, the Bank of Japan may hint at new stimulus measures that will be positively displayed on stock indices. Today in Australia have been published minutes of the previous meeting of the Reserve Bank of Australia which highlights a strong performance on the housing market in the country and the negative impact of a strong national currency. At the moment, the central bank has no need for the further reduction of interest rates from the current level of 1.50%. Our medium-term outlook remains negative and we expect a strong movement in the coming days.