Dec 19, 2018, by Lorcan Roche Kelly
Market expectations are for a “dovish hike” from the Federal Reserve at 2 p.m. Eastern Time today. The dovishness is predicted to come in the forecasts published with the decision, signalling a slower approach to policy tightening in 2019. President Donald Trump’s strong opposition to today’s expected 25 basis-points increase may have had the opposite effect: Even if Chair Jerome Powell favors a pause, going through with it risks making the central bank seem as if its susceptible to political pressure.
A bipartisan Senate effort is in the works that will delay the showdown between Congress and President Trump over funding for the border wall until the new year. The stopgap would finance the government until Fed. 8, according to a person familiar with the negotiations. While it’s unclear Trump would sign the bill and avoid a shutdown at the end of this week, the president already seems to be backing down on some of his demands.
We’d be lying if we said it will all be over in 100 days, but right now the U.K. is still on track to leave the European Union on March 29th. With the risks for an exit without an agreement in place increasing, both sides are stepping up contingency planning for what could be a chaotic period. There was better news from Italy today, as it appears agreement may have been reached between the country’s government and the European Commission over a budget.
Overnight, the MSCI Asia Pacific Index rose 0.3 percent while Japan’s Topix index closed 0.4 percent lower despite growing optimism toward a resolution of the China-U.S. trade war following confirmation of more talks in January. In Europe, the Stoxx 600 Index was 0.3 percent higher at 5:45 a.m., with Italian markets by far the best performers in the region. S&P 500 futures pointed to a bounce at the open, the 10-year Treasury yield was at 2.819 percent and gold was slightly lower.
GlaxoSmithKline Plc has agreed to create a consumer-health joint venture with Pfizer Inc., which the pharma giants plan to list on the stock market within three years. Glaxo, which will control 68 percent of the new entity, saw its shares rally by as much as 7.8 percent in London trading. There was less good corporate news in Japan where shares of SoftBank Group Corp.’s domestic telecom business saw one of the worst first-day declines ever on that market when they declined 14.5 percent after the initial public offering.