Summary for the 31th of January 2019


At the Federal Reserve rate decision, the Fed, no surprisingly, announces that it will be patient with raising interest rates. Fed’s description of the current economy is still the same as in December. In December, the Fed described the economy as “strong”, now it says the economy is “solid”. It continues and says that the consumer spending and the job gains have been growing strong also the unemployment rate remains low and the inflation near Fed’s objective of 2 percent .

It (The Fed) says that in the light of the global economic and financial development and muted inflation pressures, it will be patient when determining future interest rates.

At the press conference Jerome Powell mentions a tighter financial condition, weaker global economic growth, uncertainty about government shutdown, the Brexit,  and that these obstacles (cross currents) can hurt the US economy. He continues and says that the risks of keeping low interest rates have subsided and the risks of high stock prices also have been reduced. The process of reducing its balance sheet will still continue, it wont be using this measure actively, but this can change if the hike in interest rates loses its effect. Lastly, Powell says that how long the central bank is holding off on rates hike depends on the development in the economy.

The EU's ESI indicator declines from 107.3 to 106.2, a larger decline than what the market has expected. Still, 106.2 is higher than the long term average of 101. The indicator doesn’t show a downward trend in the economic activity in the EU.

France’s GDP for the forth quarter rises to 0.3% from third quarter. A positive surprise.

Indices on 30th of January: The Federal Reserve’s decision to be patient about rate hike + a better than expected earnings from US companies have lifted the US and Asian stock markets.

Dow: +1.8% (30th)
S&P 500: +1.6% (30th)
Nasdaq: +2.2% (30th)
Nikkei: +1.1% (31th)
Chinese indices: +1.3% (31th)
STOXX Europe 600 Index: +0.04% (31th)

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