Fed days are like the proverbial game of two halves. Recently markets have tended to have positive bias going into the meeting, but the reaction the market action post Fed announcement is an entirely different ball game. We usually see some rapid moves and counter moves as traders absorb the decision and the accompanying commentary. US markets have indeed start off higher today as traders speculate that a rate hike is less likely than previously thought. European markets set the tone early this morning, but have made little traction since. Barclays and UBS are posting impressive increases on the day, with Barclays receiving the market’s seal of approval for its plans to raise around $9bn in fresh capital. US markets were also encouraged by economic data that for once didn’t come out as worse than expected. Both Durable goods and US new home sales were roughly in line with expectations.
The FTSE has been range bound for most of the day and we see little chance of this changing between now and the close. With the great unknown of the Fed announcement due after the close, traders don’t want to have their fingers burnt with any large overnight positions.
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