European futures are trading lower indicating that the markets will open much lower and will continue their selling trend. Falling oil prices and the FOMC statement has lay down the red carpets for selling .
If the Federal reserve bank in the US thought that keeping short and sweet would keep the market calm, obviously they were on the wrong side of the market yesterday. However, it has confirmed one affair, which is the Fed are certainly not ready to send any new signals in the market, as the volatility is already at its peaks and the number of new events we have seen so far this year are already out of norm and have brought immense amount of volatility.
Volatility is extremely good for the market, especially if you are a day trader, because it brings opportunities which you must love. But, uncertainty is something which investors do not like at all. Greece leaving the Eurozone, Bre-exit, when the Fed or the Bank of England will raise the interest rates, are all those events, which open the door towards the definition of uncertainty.
In the most shortest statement since 2012, the Fed has expressed that they are satisfied with the performance of labour market and the growth in the country. Do they believe that inflation could turn out to be a deflation in the longer term? No, certainly not, it seems like they are confident that inflation will pick up in the longer term and falling oil prices will bring up the slack in the economy as the wages would rise. So, what can really bring wrinkles on the forehead of Miss Yellen when she is looking at the US economy? Surely, it is the global events, in so many words, they have expressed this when it comes to the Eurozone, geopolitical situation and an economic slowdown in China.
The stock market is determined interpret their statement as a sign that the Fed are still on their path to raise the interest rates sooner and this has taken the wind out of the equity market yesterday hence the yield on the Treasury Bonds has also fallen and the mighty dollar-the king dollar, has rallied against major currencies. The similar trend could continue today as well.
Back in Europe, the Greek equity market, bonds and especially the banking sector, are all under tremendous amount of selling pressure with volatility shooting towards the peak and the equity market plunging towards the 2012 lows. The rating agency, S&P 500 has cut Greece outlook to negative, but thankfully, they haven’t downgraded its rating, So, as a result of this, the sell off has painted the banks with more red paint and as of yesterday, National bank of Greece dropped nearly 26%, Eurobank 21%, alpha bank 22%.
In terms of stocks, Facebook (NASDAQ:FB) has reported another blockbuster earnings quarter last night. Traders were pleased with the news that the company has not only beaten its earnings per share forecast but also has produced significantly higher revenue number. Their revenue number from mobile ads, video advertisements and surge in active user engagement were all immensely encouraging and it is an area where further growth is going to continue for the company. As an investor you are happy when you see the changes done by the management are working and bringing more revenue and improving the future of the company.
Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.