Heading into the close, the FTSE 100 is 30 points lower, while US markets tread water ahead of the Fed.

  • Trade talk helps support equities after Tuesday’s rally
  • Fed to err on the side of dovishness
  • Oil prices hold their ground following EIA figures 

Equities are calm ahead of the FOMC meeting, although the dollar seems to have decided that the outcome will be a dovish one, with the dollar basket sitting at the lows of the session. Some optimism has been created by hopes that, having engaged in ‘war war’ (of the trade sort, thankfully), the US and China will now opt to ‘jaw jaw’; officials lower down in the US hierarchy are outlining their plans to meet with their counterparts ahead of the meeting of the big beasts at the weekend – the market hasn’t had a ‘trade war resolution near’ headline to trade on for a while now, so combined with a dovish central bank outlook equities might find renewed strength if the US and China can move in
 the direction of a resolution. It would be foolish to pin too much hope on the outcome however, with plenty of ground still separating the two sides. The general expectation for tonight is that the Fed will be dovish, and that the dot plot will reflect this. Action is still unlikely at this meeting, but the probability of a move in the near future is rising. 

The drop in crude stockpiles did little for oil this afternoon, but after yesterday’s price spike a consolidation was probably the best that the bulls could hope for. Having snapped its losing streak from the past few days, the focus will now be on whether today’s figures are indicative of increased demand in the near term. Otherwise, the rally of the past 24 hours could be short-lived indeed.

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