June 18, 2019, | SQUARED DIRECT – European markets opened lower today because investors are preoccupied with anticipation over central bank updates including the European Central Bank and the Federal Reserve.
European markets slide
Early this morning Stoxx 600 and DAX fell about 0.2% and CAC 40 about 0.1%. FTSE 100 was the only exception with a rise of 0.2% because the Pound is currently trading at its lowest levels of the year. Wall Street stocks have seen modest gains overnight with Nasdaq gaining 0.6% and S&P500 0.1%
In the upcoming FOMC meeting on Wednesday, interest rates are expected to remain steady, but markets are already preparing for a possible cut, as previously stated to the press by FOMC officials the previous weeks.
They reiterated that while the Committee is not prepared to ease monetary policy immediately, they want to reassure investors that the FOMC is ready to act swiftly if the need arises, such as in the case of further tariff imposition on Chinese and other country imports to the US.
Regarding the European Central Bank meeting, Mario Draghi is expected to provide further details on new stimulus plans and ideas for the Eurozone after he stated that the ECB will ease policy if inflation doesn’t pick up. For the Bank of England meeting, there are no anticipated changes.
Sterling trades at lowest level of year
The Pound Sterling in the foreign exchange markets seems to be getting the most beating from ongoing UK political uncertainty over Brexit and weak economic data. Sterling has lost about 5% of its value against the dollar since the beginning of May.
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