Fed's Decision on Interest Rate and Outlook Influences DAX's Initial 0.5% Dip
The markets are bracing for the interest rate decision by the US Federal Reserve, scheduled for this evening, with the outlook for the future interest rate path being crucial for the stock market today. Currently, the markets are pricing in two more rate cuts for this year and three for next year from the US Federal Reserve.
As the day began, the Dax started trading with an approximate value of 23,450 points, 0.5% above the previous day's closing level. The European common currency was slightly weaker on Wednesday morning, with one euro costing 1.1843 US dollars. The price of a barrel of North Sea Brent crude fell by 17 cents or 0.3 percent, trading at $68.30 at 9:00 AM German time.
The focus of the stock market today will not be on the rate decision itself, but on the outlook for the future interest rate path as stated by the Federal Reserve. Thomas Altmann of QC Partners stated that today's trading day will get more active in the evening.
The expectation is that the Federal Reserve will make a 25 basis point step down in the interest rate. Any deviation from this expectation could lead to potential losses in the stock market today. Banks and financial institutions expected to gain the most if the U.S. Federal Reserve follows the 2023 interest rate path are typically major U.S. banks and lenders that benefit from rising interest rates, such as JPMorgan Chase, Bank of America, and Citigroup, as rising rates improve their net interest margins; investment firms positioned in U.S. bonds and financial markets that anticipate Fed rate hikes and subsequent gradual cuts may also profit.
On the Dax, Zalando, BASF, and Siemens were at the bottom of the price list, while SAP, Rheinmetall, and MTU were at the top. However, no new statements were made about the performance of specific companies on the Dax.
The oil price fell on Wednesday morning, with the price of a barrel of North Sea Brent crude costing $68.30 at 9:00 AM German time. One dollar was available for 0.8444 euros on Wednesday morning. No advertisements were present in the current paragraph, ensuring a factual and unbiased report.
