The Amsterdam AEX has opened neutral today, just like the rest of the European stock markets. At the moment, the financial world holds its breath for the outcome of the conflict between Israel and Iran, while the US central bank also attracts a lot of attention today.
Focus on the US Central Bank
Tonight at 8 p.m. Dutch time, the US Central Bank shares its new interest rate decision. The decision itself is not exciting, because the chance is practically 100% that the interest rate remains unchanged.
Much more interesting is the press conference of chairman Jerome Powell who follows at 8.30 pm. During the press moment, Powell will undoubtedly get questions about the health of the US economy.
The labor market starts to give signals of cooling after it has been overheated since the COVID-19 Pandemie. In the meantime, the economy is starting to weaken slightly, while inflation towards the 2.0% target is moving.
As a result, the American central bank in theory is given more room to lower interest rates, and that is exactly what President Donald Trump hopes for. Within the central bank, people are probably not happy with the continuous interference of Trump with their interest rate policy.
For that reason it is possible that the central bank is more difficult to convince to lower interest rates because they think it is important to show political independence. And so don’t just want to bow to the wishes of the president.
Middle East is a risk
The conflict in the Middle East is also a potential risk for inflation. At the start of the conflict on Friday we saw the oil prices rise sharply, because Iran can potentially stop or block a large part of oil production by closing the Strait of Hormuz.
However, the chance of this seems small, because they would also hurt China, their most important trading partner in the field of oil.
Yet there is a chance of this scenario, and that gives the US central bank a bit of uncertainty about inflation. Just like Trump’s tax war.
In that respect there is also something to be said for a more wait -and -see attitude of the central bank. In any case, tonight’s outcome promises to ensure a lot of volatility in the financial markets. For the AEX Koers, this will mainly be expressed at the opening of tomorrow.
Source: https://newsbit.nl/vlakke-start-aex-in-aanloop-naar-cruciale-persconferentie-amerikaanse-centrale-bank/
