29 Aug, 2016 (8:12AM IST)
28 August 2016 (10:43 PM EDT)
The financial world has woken up with dream of money in its eyes after a weekend where everyone was eager to know how global stock markets will react after the Fed’s rate hike hints last Friday.
In Asia, the opening reaction is slightly negative, but not much and Nikkei has jumped by more than 350 points as the Bank of Japan is considering more stimulus after many negative economic reports.
U.S. and European stock futures are negative, yet the margins are very thin as if these futures are waiting to turn positive. These are the trend setting numbers and it will now depend on European markets, which way they lead global trend. U.S. markets had recovered last Friday after their highly volatile and middle-of-the-session drop. For U.S. markets, the Fed’s comments were a mixture of good news (improving economy) and bad news (possible September rate hike). But, an improving economy will support those markets and their may be buying support at every drop.
BUT- how will the Fed’s rate hike affect other markets? For emerging markets, it is sure a negative signal. However, it will once again depend on how the bigger markets trade. A bigger correction will be reflected with similar sentiment in other markets.Yet, a muted correction will support other markets too.
European markets had closed much before the slide in U.S. markets and thus, had ended with positive numbers.
It will be interesting to see if European markets will react in a much negative way today to the Fed’s hints. Or, whether these markets find balance at current levels after a negative opening-which looks possible at the time of writing.
Global markets are still within their last week’s range. Still under pressure after the Fed’s rate hike hints at last week’s Jackson Hole summit.
Keep an eye for bounce back at support levels. Resistance levels are expected to be stronger so look for an opportunity to sell at high.
Good luck, enjoy the session!