(News Bulletin 247) – The New York Stock Exchange should continue its recovery on Tuesday morning, as a semblance of calm now seems to be returning to the banking sector.
Half an hour before the opening, the futures contracts on the major New York indices advanced from 0.7% to 1%, announcing a start to the session in the green.
After the shock wave caused by the collapse of Credit Suisse and the bankruptcy of several American regional banks, Wall Street hopes to be able to regain its senses in the days to come.
The return to the fore of questions concerning the evolution of the US Federal Reserve’s monetary policy could well help it pull itself together.
The Fed’s monetary policy committee is indeed meeting for two days on Tuesday and Wednesday and it will be interesting to see what the institution’s reaction will be to the recent scandals that have rocked the financial system.
After the tremors of the last ten days, financial conditions have tightened significantly and it seems almost certain that the Fed will give up adopting decisions that are too restrictive, which would be a good thing for the equity markets.
The strategists nevertheless dismiss the scenario of an overly hasty ‘pivot’ which would see the central bank opt for rate cuts in order to reassure a system which has been in great fear lately.
“Cutting rates too early is a mistake they believe they made in previous periods of inflation,” said Steven Bell, Columbia Threadneedle Investments’ chief regional economist for Europe.
‘She then had to backtrack, which led to a deeper recession than if she had kept her cool’, underlines the analyst.
Looking at the CME’s FedWatch Barometer, traders are now almost completely ruling out a Fed status quo tomorrow and overwhelmingly (82%) are eyeing the possibility of a 25 basis point rate hike.
While the absence of bad news in the banking sector helps support the trend, investors will also be on the lookout for encouraging indicators on the economic front.
The figures for sales of old homes which will be published early in the morning will show whether the trend continues to deteriorate on the real estate market, even if its recent deterioration is still far from echoing that which characterized the financial crisis of 2008.
Copyright (c) 2023 News Bulletin 247. All rights reserved.
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
