Daily Alert – Wednesday 26th January 2022: Can tonight’s Fed calm the markets?

Mark NugentDaily Alert, Jan 2022

Daily Alert – Wednesday 26th January 2022: Can tonight’s Fed calm the markets?

Good morning.

Yesterday was another risk-off day with similar dynamics to Monday. Equities fell in the morning and then rose in the afternoon. That’s where the similarity ended as a final two-hour period of selling produced a solid bear candle on the daily chart. The S&P500 joined the Nasdaq in correction territory, showing a drop from the recent high of at least 10 percent.

The markets are now looking forward to the Fed at 7pm GMT. Guidance is expected on the plan for this year’s interest rate hikes. With a bit of luck, the Fed will calm fears that they may overreact to inflation by raising rates too much and too quickly. If they manage this, they will take a significant worry off the table and the markets may return to normal levels of irrational exuberance.

Russia is still causing concerns at the Ukraine border and US President Biden has threatened personal sanctions on Putin if there is any funny business involving tanks.

As of 8am BST today, equities are moving solidly upwards, but I won’t be dragged into trading before tonight’s Fed.

We’ll be back tomorrow.

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