Morning Bid: Markets Anticipate Fed Decision and Earnings Surge

An extensive preview of forthcoming events taking place in European as well as global markets from Brigid Riley.

Federal Reserve Decision in the Spotlight

Everyone's eyes are focused on this Federal Reserve today as it is the leader among central banks when it announces the decision on interest rates during the week. The majority of market participants expect an increase of 25 basis points by the Federal Open Market Committee (FOMC) on Wednesday. But the main focus will be the upcoming press conference where investors will be watching closely for the FOMC's Chairman Jerome Powell's comments on the likelihood of a second interest rate increase in the near future.

Image of Latest US Federal Reserve rate cuts sources from Reuters

Implications for Global Markets

The Federal Reserve's message will significantly impact the mood of markets in anticipation of the policy announcements coming from the European Central Bank (ECB) on Thursday and from the Bank of Japan (BOJ) on Friday. The ECB appears poised to give another modest hike, and the BOJ is predicted to continue its ultra-low policy setting.

Company Earnings Reports in the United States

Within the reports on company earnings to be released on Wednesday morning in the United States, Meta Platforms (META.O) is the most prominent. This list includes AT&T (T.N), Thermo Fisher Scientific (TMO.N), U.S. railroad operator Union Pacific Corp (UNP.N), eBay (EBAY.O), Boeing (BA.N) along with Coca-Cola (KO.N). Interestingly the two companies, Microsoft as well as Alphabet, reported strong earnings following Tuesday's U.S. market close on Tuesday.

European Companies Reporting Earnings

In Europe, there are several businesses expected to announce their results. French-based retailer Carrefour and the worldwide food and beverage firm Danone (DANO.PA) include two of the list. Furthermore, GSK (GSK.L) and Stellantis (STLAM.MI) will publish their annual earnings reports.

Economic Stimulus Measures in China

Asian markets are watching closely for any details regarding new stimulus plans for the economy from China in the wake of the Politburo's announcement to increase assistance to the weak economy. Chinese market prices were down on Wednesday, following a dramatic increase the day prior. Hong Hong Kong's Hang Seng Index (.HSI) decreased 0.8 percent, while the tech and property subindexes followed. The blue chip China's CSI300 (.CSI300) index fell 0.3 percent, whereas its CSI 300 Real Estate index increased 0.2 percent.

Australian CPI Data and Reserve Bank of Australia

Australian Consumer Price Index (CPI) figures published on Wednesday showed the inflation rate was less than anticipated during the month of June. The result affected the Australian dollar. However, it allows Australia's Reserve Bank of Australia with a bit of breathing room prior to the next meeting of its policy committee beginning on August 1.

Key Developments Influencing Markets on Wednesday



•      France's June Unemployment Data: A window into the ever-evolving landscape of the French job market, as we seek to unravel the employment trends and gain insights into the current economic climate.

•      Euro Zone's June M3 Annual Growth and Lending Data: A tapestry of figures that illuminates the monetary aggregates and lending activity within the Eurozone, offering a glimpse into the region's financial stability and liquidity.

•      U.S. June New Home Sales: A chapter in the American real estate saga, where we witness the dynamics of new home sales, gauging the demand and trends that shape the housing market.

•      U.S. Federal Reserve Announces Interest Rate Decision: An eagerly anticipated moment, where the Federal Reserve unveils its verdict on interest rates, a decision that ripples across the global financial landscape, impacting markets and businesses alike.

Market Summary

In the end, the markets for financial instruments are set to witness an eventful day thanks to an interest rate determination and the earnings report of prominent firms. Investors, as well as analysts, keep an eye on the outcome of these developments, which can significantly impact market dynamics in the upcoming days. In addition, the global economy could see additional impacts based on the policies put forth by the European Central Bank and the Bank of Japan in the weeks to come. It is important to stay informed and flexible in responding to the changes in the world will be essential for all market players.