Dubai: Stocks market investors will be looking for ways to avoiding risk as they turn a cautious head towards central bank meetings in the US and Japan this week.
Among other events, traders would be keenly watching the Friday’s release of banking stress test results, along with the UK GDP data on Wednesday and the US GDP data on Friday.
The US Federal Reserve is expected to hold the interest rates steady when they meet on Tuesday and Wednesday and continue maintaining the positive outlook on the economy but may offer some direction on the next move. The Bank of Japan (BOJ) may add to stimulus avoiding any helicopter money.
About 45 per cent predict the Fed will raise rates by December. The Fed raised its target to a range of 0.25 per cent to 0.5 per cent in December, the first increase since 2006.
“Markets has already priced in a positive scenario with regards to US interest rates and global quantitative easing (QE), and near-terms risks rewards may be skewed towards any negative outcome,” Saleem Khokhar, head of fund management and equities, NBAD Global Asset Management told Gulf News.
The Dow Jones Industrial Average was up 0.3 per cent to hit a peak last week, continuing its fourth week of gaining streak, while the S&P 500 ended up more than half a per cent.
Khokhar would prefer sitting on the sidelines or in defensive stocks in the near-term. Gary Dugan, chief investment officer, Emirates NBD advises risk-prone investors to purchase stocks that offer bargains.
Dugan expects further upside in Japanese equities, and more downside in the yen on expectations of further stimulus. On Friday, the Japan’s Nikkei closed more than 1 per cent lower.
“The current thinking is that the government is considering a larger overall fiscal boost with a more significant front load of support potentially including direct credits to households,” Dugan said.
Most economists see the BOJ stepping up its stimulus on July 29 as diminished expectations for inflation leave little prospect of achieving the 2 per cent inflation target by the current objective of the 2017 fiscal year.
