All eyes on US Fed meeting this week amid rate cut expectations

Despite snapping a 3-week winning streak, Wall St stocks look likely to scale new highs

- Ven Sreenivasan

Despite snapping a three-week winning streak, stocks look likely to head higher in the coming weeks as central banks such as the US Federal Reserve, Bank of Japan and Bank of England weigh in with interest rates.

This week's Fed meeting will be especially important as investors have priced in a 96 per cent chance that the US central bank will cut rates by 25 basis points when it meets on Dec 18, according to CME Group's FedWatch Tool.

But markets will be watching closely what Fed chairman Jerome Powell says at his press conference, especially what is contained in the post-meeting statement, including the forecasts in the Fed's quarterly Summary of Economic Projections.

These will offer clues about what policymakers think about the economic and inflation outlook, and interest rate trajectory.

Despite last week's pause, Wall Street stocks look likely to scale new highs, not just on optimism of Fed rate cuts but also on expectations that the incoming Trump administration will remove regulatory shackles on corporations, especially the financial sector.

The Dow Jones Industrial Average ended the week 1.82 per cent lower at 43,828.06. But the marquee index is still up 0.88 per cent over the past month and almost 6 per cent over the past three months.

Meanwhile, the S&P 500 maintained its hold above the 6,000-point level, though it ended the week 0.64 per cent down at its Dec 13 close of 6,051.09 points.

However, the tech-heavy Nasdaq continued rising, edging up 0.34 per cent for the week to 19,926.72 points.

In Singapore, the Straits Times Index edged up 0.4 per cent last week to 3,810.35 after spending most of the five days in a narrow 35-point trading range between 3,820 and 3,785. Immediate reference levels for the week ahead include the 3,842.71 high on Dec 5 and the 3,785 level tested last week.