There may be a degree of concern building across Asian equity traders over just how hawkish the Federal Reserve will be when the monetary policy statement is released later today, but this has largely been sidelined by news that the Chinese Central bank is flooding lenders with liquidity in a bid to prevent the economy from stalling. This came on the back of yet more disappointing economic data from Beijing overnight, but for the majority of regional markets the stimulus news has helped reverse recent declines. The exception here is the Nikkei where fears of an aggressive message from the Fed appear to be taking a toll.
Wall Street appears to be takings its lead from Asia however with expectations that yesterday’s gains will be extended modestly at the open. Before the bell however we do have the latest US inflation data and anything too weak here could well serve to shift opinions as to how the Fed will act this evening. For now however a very clear line has been drawn in the sand with regard to what traders are focusing on and some may elect to sit on the sidelines until the Fed has shown its hand. Ahead of the open we’re calling the DOW up 10 at 17142 and the S&P up 2 at 2001.