Will the Rate Hike Possibility Have Any Impact on Equity Markets?
Interest rates and equity markets usually have an inverse relationship.
Since the last FOMC meeting in July, economic conditions in the US have continued to improve.
In this series, we’ll examine the improvements in the US economy since the last Fed meeting and discuss whether these developments could warrant accelerated tightening from the Fed.
Economic Indicators Investors Should Watch This Week
The inflation index is an important indicator for the US economy.
In August 2017, Russia’s (RSX) manufacturing activity saw a decline in overall business conditions as compared to the previous month.
In August 2017, Indonesia’s (IDX) (ASEA) manufacturing activity saw a sharp rise in the overall business conditions as compared to a contraction in the previous month.
EWU Rises as Bank of England Holds Firm on Interest Rates
The Bank of England’s MPC voted to hold interest rates at 0.5%, which strengthened the pound sterling against the euro and dollar. The EWU rose by 0.89%.
The UK market’s reaction to the ECB’s announcement of its asset-buying plan was reflected in the rise of the iShares MSCI United Kingdom ETF (EWU) on Thursday, September 3.
The UK market experienced a stock rally on Thursday, September 3, over a comment of the ECB Chief Mario Draghi regarding the ECB’s plan to fully implement its asset-buying program.
A Look at the Fund Flows in Low-Volatility ETF SPLV
The anticipated views of the Federal Reserve members are expected to make way for utilities (IDU) (VPU) and for low-volatility funds.
Since July 2016, VPU has experienced net outflows of nearly $320 million.
In VPU, the top ten holdings form nearly 50% of the total portfolio. These holdings include NextEra Energy (NEE), Duke Energy (DUK), and Southern Company (SO).
Brazilian Real Nears All-Time Lows in 2015
The Brazilian real has been trading on a weaker note against the US dollar in the last year after depreciating by more than 40% against the US dollar.
The Brazilian real underwent massive depreciation of 1.89% against the US dollar on September 10 after the country’s credit rating went from “investment-grade” to “junk” status the night before.
A strong dollar has had an adverse impact on emerging market currencies. Monetary policy tightening could also lead to an outflow of capital from emerging economies.