Ongoing energy crisis and impact of pending rate hike decision over the global economy

The Global economy is always struggling hard to meet the ongoing demands of the human nature. From the very of the year 2016, there has been a massive chaos into the stock and fx market due to the confusion of the interest rate hike decision by the FED. The FED tried to hike their interest rate in the mid of the year 2016 but the struggling U.S economy didn’t favor the hike program by the FED. But there is a high chance that the FED will most likely hike their interest rate in the month of December. According to some leading economic researchers, there is 67.3% chance of rate hike by the FED in the month of December, but the rate hike decision by the Fed in the month of December will not be enough to meet the ongoing crisis of the U.S economy. Investors all over the world are cautiously waiting for the rate hike decisions of the FED so that they get a clear overview of the current and next market scenario in the investing world. The Upcoming U.S precedential election is also going to play a significant role in the price movement of the stock market since new government means new policy. In the eyes of trained stock traders, it is better to stay in the sideline and trade the market with a precious clue of the global economy.

There has been instability in the utility stock price since no is sure about the FED rate hike decision. The ongoing energy crisis and struggling U.S economy have created a hard trading environment for the traders to trade different financial assets at the current situation. If you look at a defensive overview then we will see the S&P 500 industries sentiment has changed to a great extent in the recent month. Even the large hedge fund investors are in fear and looking for a clear indication of the market sentiment. The market sentiment is neither bullish nor bearish at the current situation as most of the leading companies are waiting for a clear statement from the FED. The XLU has been up by 11.1% in 2016 which is clearly more than 4.5% of the S&P 500 index. The S&P 500 index has been down for the last consecutive three months which has incurred a loss of the 7.6% .Such sort of similar activities has been spotted in the ETF industries also. One of the most prominent energy sectors company like the Alpha DEX or FXU was down by 5.8% over the last three months. The down in the price was confined to the last three months activities however, the overall value remains bullish for then 14.5% in the year 2016.

For the first time in the economy, there has been a smoky sentient into the investing world since rate hike decisions by the FED is not going to settle the dust in the market .The FED needs to come up with a clear hawkish hike the upcoming FOMC meeting minute stating that the month of December will be the best time to hike their interest rate. On the contrary, if the U.S economy struggles in the month of December then we are most like to see a dovish hike in the month of December which will further intensify the global crisis. According to the leading economic researcher's rate hike in the month of December will have a positive impact on the U.S economy since traders will find a safe haven to trade the precious metal except for the gold. The consumer sentiment has been altered to a great extent since the funds are going in and out of by the FED members. There has been an inflow of $681.2 million in the SPDR fund which is considered to be the most popular and the biggest pool in this sectors till 2016.Though the inflow was a significant amount but investors are in fear since the overall pulled out fund now exceeds more than $232.7 which clearly indicates the struggling U.S economy. There has been a massive outflow of the ETF funds for more than $64.3 million over the past month whereas the total inflow was $70.4 million.

Though the global economy is struggling pretty hard and the FED are unable to come up with a solid statement in their FOMC meeting but still there remains a positive sign for the recovery of the ongoing crisis. The average ratio of P/E is below 28.3 which clearly indicates a strong possibility of recovery in the energy sectors. The current dividend is offering broader eclipse to market which is also a safe action to the economy. The current average for FXU is 3.58% for the SPDR components whereas the average yield of the S&P 500 component is near about 2.13%.

Summary: The ongoing energy crisis has been furthermore intensified due to the global economic crisis. The current interest rate hike decisions by the FED is going to play a major role in the performance of the global economy. In the eyes of trained professional, a hawkish statement from the FED in the month of December will mitigate the ongoing global economic crisis to a great extent and the precious metal investors will have a nice trading environment. Though there is 67.3% chance of rate hike in the month of December it is very important that the U.S economic performance exceeds the previous month performance so that the FED can come up with a hawkish statement. The ongoing smoky environment is most likely to face its end in the month of December since there is high chance of rate hike by the FED members.