ASX Set for Flat Start as Wall Street Drifts Ahead of Federal Reserve Decision

As Wall Street anticipates a significant announcement from the Federal Reserve, US stock indexes are moving higher in a generally optimistic trend. This impending decision carries the potential to influence market directions well into the following year.

The S&P 500 has seen a modest increase of 0.2 percent, edging closer to its all-time high reached earlier this month. Similarly, the Dow Jones rose by 173 points, or 0.4 percent, while the Nasdaq composite also added 0.2 percent to its value.

Market Performance Before the Fed’s Decision

Across the board, Wall Street appears to be recovering ahead of the Fed's interest rate announcement. This decision is highly anticipated as it will be the Federal Reserve's third rate cut of the year. The Fed has worked diligently to bring inflation down from over 9 percent to nearly its 2 percent target, indicating a strong shift in monetary policy.

The Australian sharemarket, however, is forecasted to open flat, with futures at 5am AEDT signaling a slight dip of 2 points at the start of trading. Notably, ASX experienced a minor decline of 4.6 points in the previous session.

Key Movers in Today’s Market

Among notable stock performances today, Jabil surged by 9.8 percent, which played a key role in boosting the market. This increase follows the company’s report of stronger-than-expected profits and revenues for the recent quarter, alongside an upgrade of their revenue forecast for the entire fiscal year.

Another notable performer is Nvidia, which climbed 3.9 percent after a significant drop in its value over the previous weeks. This rise comes after a 12 percent decline from its record high set last month and a streak of falling prices in eight out of the last nine trading days.

Stocks That Did Not Fare Well

On the downside, General Mills struggled, losing 3.2 percent despite announcing better-than-expected profits. The company, known for brands such as Progresso soups and Cheerios, is shifting its strategy to increase investments in its brands for future growth, which has led to a reduction in profit forecasts for the current fiscal year.

Looking Ahead

Market activity is expected to stay relatively subdued until later in the day, when the Federal Reserve's decision is revealed. Financial analysts are particularly keen to hear comments from Fed Chair Jerome Powell during his press conference post-announcement. Investors are curious about how much more the Fed intends to reduce rates in 2025, especially as inflation trends upward.

Although expectations for future rate cuts in 2025 have begun to adjust due to rising inflation, there are additional concerns surrounding the economic impact of policies promoted by President-elect Donald Trump. Analysts warn that his preference for tariffs could further increase inflation.

Treasury Yields and Global Market Trends

Meanwhile, US Treasury yields held steady, awaiting further guidance on interest rates. The yield on the 10-year Treasury saw a slight decrease to 4.39 percent from 4.40 percent late Tuesday, and the two-year yield, which is typically more aligned with Fed expectations, eased to 4.23 percent from 4.25 percent.

Examining global markets, London’s FTSE 100 edged up slightly by less than 0.1 percent as inflation data indicated a rise to 2.6 percent in November, the highest in eight months. The Bank of England is also scheduled to announce its interest rate decision this week. In Japan, the Nikkei 225 dropped 0.7 percent ahead of its own central bank meeting later in the week, even with Nissan reporting a remarkable 23.7 percent rise associated with discussions of collaboration with Honda.

As this week unfolds, market participants remain focused on both domestic and international developments and their potential impact on economic trajectories.

ASX, WallStreet, FederalReserve