The trading week has begun with investors in cautious mode, looking ahead to the key FOMC meeting that begins on Wednesday.
By Peter Martin
Monday, September 14, 2015
The Fed’s decision is hotly anticipated, with this meeting having been long mooted as a potential candidate for lift-off, though continued below-target levels of inflation and the questionable outlook for the global economy has caused many to shift expectation to December for a first rate hike.
Those global growth concerns have mainly stemmed from weak economic news out of China in recent weeks, and the issue raised its head again this weekend with worse-than-expected factory data announced by Beijing. Chinese industrial production rose 6.1% in July from a year ago, below the consensus market expectation for a 6.5% increase. The monthly change was +0.53% overall, though there were worrying declines in autos, transport equipment and machinery output. The Shanghai Composite Index finished down 2.7%. It wasn’t all bad news out of China though: also released were retail sales for August, showing a slightly better-than-expected increase of 10.8% year-on-year. The news has acted as a drag on oil prices, contributing to a 1.6% decline crude oil futures, taking the price down to $44.00 a barrel.
Unlike the behaviour we have seen in recent weeks though, the Asian decline has not carried strongly over into western stock markets and Wall Street opened up only slightly in the red, suggesting the greater focus of attention is on the Fed. Shortly after the opening bell, the Dow Jones was trading down 55 points or 0.34%, while the S&P 500 Index declined 0.29% to 1955.2. At the time of writing, binary options for Wall Street to finish up were trading on NADEX with a bid/offer of 28.4/30.0.
Apple ($AAPL) provided a boost, rising 2.2% after the company revealed that it was on track to out-perform last year’s record first-weekend sales for its iPhones. ‘Customer response to iPhone 6s and iPhone 6s Plus has been extremely positive and pre-orders this weekend were very strong around the world,’ read a statement issued by Apple. ‘We are on pace to beat last year's 10 million unit first-weekend record when the new iPhones go on sale September 25.’
Monday’s economic calendar is blank in terms of major domestic releases, but there are a number of key reports to look forward to later in the week. These include August’s retail sales, which are released on Tuesday morning with a 0.3% increase expected. August’s industrial production data will be released the same day and on Wednesday we have the Consumer Price Index for August, coinciding with the start of the FOMC meeting. The CPI is expected to come in unchanged for August, which would hardly bolster the case being argued by hawks at the Fed that a rate hike is either justified or required. The Fed’s decision will be announced on Thursday afternoon.
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