Concerns over the state of the banking sector prompted a sell-off in global stock markets this week and investors are now hoping the Fed will ease its hawkish rhetoric at next week’s meeting. We will find out how the Fed will react next Wednesday at 7:00 p.m. German time. However, interest rate decisions from the Bank of England and the Swiss National Bank will also draw attention, as will flash September PMIs from Europe and the US. Watch out for the S&P 500, DAX and GBPCHF next week!
S&P 500 / US500
The FOMC interest rate decision is a key event of the week. The market expects the Fed to hike rates by just 25 basis points amid easing inflationary pressures and the recent banking turmoil. However, some expect the central bank to be able to change course if the financial system struggles. We will see if these expectations are met at 10:00 GMT on Wednesday and any deviation from a 25 basis point rate move could potentially trigger additional volatility in the markets. The session will also be closely watched as a new set of economic forecasts will be presented.
DAX / DE30
While central banks will be the focus of attention over the next week, the release of March’s flash PMI indexes could also trigger a jump in volatility. German manufacturing and service indices are expected to be slightly higher compared to February and the weaker-than-expected data could give some boost to the DAX bulls. As usual, the focus in Europe will be on the releases from France (Friday 09:15 GMT) and Germany (09:30 GMT).
GBPCHF
The Fed is not the only major central bank set to announce a policy decision in the coming week. Investors will also hear from the Bank of England and the Swiss National Bank, both of which will make decisions on Thursday. The Bank of England will have one rate hike expected by 25 basis points. However, the interest rate futures contracts assume a 40% chance that the interest rate will remain unchanged. At the same time, the SNB is in a difficult position given the high inflation and the uncertainty surrounding Credit Suisse. Investors are expecting a more cautious stance from Swiss decision-makers. The market now expects only a 25 basis point rate hike, compared to a 75 basis point hike that was priced in at the beginning of the month.
***
***
Disclosure according to § 80 WpHG for the purpose of possible conflicts of interest
The author may be invested in the securities or underlyings discussed.
The authors of the publications compile that information at their own risk. Analysis and opinions are not written with reference to the specific investment objectives and needs of any person. XTB publications commenting on specific situations in the financial markets and general statements made by XTB employees regarding the financial markets, do not constitute and should not be construed as advice to the customer by XTB. XTB is not liable for any loss arising directly or indirectly from decisions made regarding the content of the publications.
Risk Notice
CFDs are complex instruments and come with a high risk of losing money quickly because of leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Investment success and profits from the past do not guarantee success in the future. XTB content, newsletters and communications do not constitute investment advice promotional message to understand.
