UK Market Comments

Heading into the close the FTSE 100 is up 51 points as the countdown to the Fed meeting begins.

UK markets

In London the FTSE is flying high as traders prepare for the FOMC. The bond-buying scheme is expected to come to a halt, and dealers are banking on a signal from the Fed that interest rates are not likely to move until well into next year. It was nearly six years ago the printing presses were fired up and tonight could be the final call as Ms Yellen is expected to flip the switch on the bond-buying scheme. Barclays is feeling the pinch this afternoon ahead of its third-quarter statement tomorrow. The bank may have passed the EBA stress test but the more rigorous BoE stress test, which is due out in December, will sort the men from the boys. Tesco shares are surprisingly unfazed by the criminal investigation launched by the SFO into its accounting practices. Given the seriousness of the situation I would have expected another blood bath.

US markets

In the US, the Dow is up 11 points at 17,017; the mood is one of cautious optimism ahead of the Fed meeting. Traders are waiting for the green light from the US central bank that interest rates will remain rock bottom for many months to come before jumping on the gravy train. Facebook lost a few friends last night after warning investors will revenue growth will tail off and spending will accelerate.

Commodities

Gold fears what could be the final taper from the Fed as it comes to the end of its golden run. QE has greatly benefitted gold over the past number of years and now the metal is going to come under even more pressure as traders will start talking about rate hikes. WTI has hit a four-day high as dealers are betting on dovish tones from the Fed tonight; the FOMC statement has put the brakes on the collapsing price of oil.

FX

The US dollar is dipping ahead of the FOMC tonight. The Fed is expected to finish the bond-buying scheme, and traders will be sifting through the statement to ascertain how long is a ‘considerable’ amount of time before interest rates begin to rise. I suspect the Fed will be in no rush to raise interest rates as Ms Yellen won’t want to be remembered as the Fed chair that launched QE4. The euro advanced versus the greenback as there have been very few economic announcements from the eurozone this week. When it comes to the euro no news is good news, however inflation reports on Friday will threaten the single currency’s lucky streak.