Today investors will be preoccupied with the policy meeting of the Federal Reserve. Some economic reports recently (such as NFPs) have been encouraging, while others (retail sales) have disappointed the markets. This means that the Fed will probably opt to continue with its cautious approach to monetary policy and not talk about reducing bond purchases or increasing the interest rate at all.
However, something to watch out for is the forward guidance remarks of the Federal Reserve. As of previous meetings, 2024 was set as the earliest possible date for a rate hike. But with all of the vaccination progress and falling Covid-19 infection rates in the United States, the Fed might feel more optimistic about the future of the US economy.
The major US stock indices today will be mostly flat as they await the latest word from the Federal Reserve to determine sentiment. Google’s parent company, Alphabet, might be one name to keep an eye on as it is in the process of negotiating new terms regarding better pay for app developers in response to past criticism.
At the other end of the spectrum, Brazil’s central bank today is expected to hike the interest rate to 2.5% in response to sharply growing inflation. The Brazilian real has been under pressure due to the strengthening of the US dollar and prices have risen considerably since the beginning of 2021.
Echoing Brazil, the two other major emerging economies of Turkey and Russia are also expected to take a similar monetary policy stance as their currencies slide versus the appreciating dollar.
Meanwhile, East Asian companies such as Samsung, Honda, and Toyota have raised concerns over the interruptions in the supply of vital materials globally. The issue is linked to the recent extreme weather and power outages in Texas, which contributed to a shortage of semiconductors and some chemicals required by the automotive industry.
