US markets edge higher ahead of Fed’s statement

US stocks inched higher on Tuesday with S&P 500 and Nasdaq Composite closing near record levels reached last week. The S&P 500 gained 0.3%, with nine of its main sectors finishing higher. The gains were limited by disappointing earnings and weaker than expected economic data. Consumer confidence declined in April, indicating a slowdown in hiring and lower expectations of economic growth in near term. Today the Federal Open Market Committee releases its interest rate statement at 19:00 CET. Policy makers will assess the performance of US economy in light of the slowdown in the first quarter due to harsh winter, stronger dollar and reduced investment in energy industry caused by a slump in oil prices. As a result the first quarter US GDP growth is expected to fall to 1 percent from 2.2 percent growth in the previous quarter. Majority of market participants believe the current conditions do not warrant a rate hike in June or July and expect the Fed will raise interest rates in September, as evidenced by rising markets while earnings prospects deteriorate. The dollar traded lower on Tuesday as the ICE US Dollar Index slipped 0.6% to 96.14. Today at 12:00 CET Mortgage Applications will be released in US. At 13:30 CET the advance estimate of first quarter GDP will be published. The tentative outlook is negative for the dollar. At 15:00 CET March Pending Home Sales will be released. The tentative outlook is negative.

European stocks fell on Tuesday as investors adopted cautious stance ahead of the Fed’s meeting and market sentiment was undermined by weaker than expected corporate reports. Commerzbank fell 5.7 percent after the German bank launched a share sale to raise 1.4 billion euros ($1.5 billion) from institutional investors to bolster its capital. Mining equipment group Atlas Copco lost 9 percent after warning that demand for its equipment had dropped further in the first quarter. Germany’s DAX 30 fell 1.4%. The FTSEurofirst closed down 1.5 percent, reversing gains from the previous session, with only energy sector advancing. Euro advanced against the dollar. Today at 13:00 CET preliminary Consumer Price Index for April will be released in Germany. The tentative outlook is positive for euro. At 11:00 CET April Reported Sales will be published in UK. The tentative outlook is positive for the Pound. And tomorrow at 0:50 CET Gfk Consumer Confidence Index for April will be published. The tentative outlook is positive.

Markets are closed today in Japan for a national holiday. Tomorrow at 00:50 CET preliminary Industrial Production will be published in Japan. The tentative outlook is negative for the yen. And at 4:00 CET Bank of Japan’s Policy Statement will be released and Governor Kuroda’s press conference starts. At 6:00 CET March Housing starts will be released, at 7:00 CET Semiannual Monetary Policy Report will be published.

Oil prices were mixed on Tuesday as traders awaited US inventory data and digested Saudi Arabia’s pledge to keep pumping oil to defend its market share. June Brent crude on London’s ICE Futures exchange fell 0.3%, while June WTI crude closed up 0.1% .Today US Crude Oil Inventories will be released by the Energy Information Agency at 15:30 CET, another weekly rise in stockpiles is expected.

Gold prices continued to advance on Tuesday, closing at highest level in about three weeks on the back of weaker dollar.

Source: IFC Markets