Closing Bell 20th March: Energy stocks up as gold takes a breather into FOMC meeting tonight

ASX and Asian markets quiet ahead of tonight’s Fed meeting

Australia’s ASX 200 rose slightly, extending gains after the Reserve Bank of Australia struck a less hawkish tone than markets were expecting on Tuesday. 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes were flat, as was Hong Kong’s Hang Seng, after the People’s Bank of China kept its benchmark loan prime rate unchanged, as widely expected. Futures for India’s Nifty 50 index pointed to a mildly positive open. The Nifty rebounded after falling over 1% each on Tuesday.

Markets were focused largely on the conclusion of a Fed meeting later on Wednesday. While the central bank is widely expected to keep interest rates unchanged, any signals on its plans for interest rate cuts in 2024 will be closely watched.

Focus in particular is on the Fed’s policy statement, as well as a press conference with Chair Jerome Powell after the meeting. Markets were particularly wary of any hawkish signals after hotter-than-expected inflation readings for the past two months.

Fed Ahead

The focus now shifts to the Fed meeting, with Chairman Jerome Powell expected to emphasize the need for further evidence of inflation cooling. The Fed’s two-day meeting kicked off Tuesday, but with a unchanged decision on rates expected, investors wary that the Fed may signal fewer rate cuts this year following a recent bout of hotter-than-expected inflation data. 

The “dot plots” will be key in the Fed communicating future movements on rates and if “higher for longer” turns out to be a reality, the recent froth in tech stocks is a huge risk of unwinding