Markets in a State of Flux Ahead of Federal Reserve Decision
The German Dax index closed lower on Wednesday, with a 0.5% decline to 23,318 points, as the market digested the latest geopolitical developments and awaited the Federal Reserve’s monetary policy decision later in the day.
Market analysts, such as Jochen Stanzl, Chief Market Analyst at CMC Markets, expect the Fed’s decision to have a significant impact on the market. “The summer lull at the stock exchange, which usually brings a quieter trading day, seems to be falling flat this year” Stanzl said, noting that the market is highly sensitive to the Fed’s actions.
Despite the market’s resilience, Stanzl believes that the absence of the Fed’s support could lead to a correction in the market. “The majority of investors are expecting a rate cut in the fall and another one at the end of the year, but Fed Chairman Powell might be in a mood to disappoint these expectations, given the robust labor market” he said.
Meanwhile, the price of natural gas decreased, with a megawatt hour of gas for delivery in July costing 39 euros, a 2% decline from the previous day. This would translate to a consumer price of at least 8 to 10 cents per kilowatt hour, including additional costs and taxes, if the price remains stable.
Oil prices also fell, with a barrel of Brent crude costing $75.13, a 1.7% decline from the previous day’s close.
The euro, the European Union’s common currency, strengthened against the US dollar, with one euro equivalent to 1.1514 US dollars and one US dollar equivalent to 0.8685 euros, as of the market’s close on Wednesday.