Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: 4.8
Article rating: 5.0
Article rating: 3.0
Article rating: No rating
Article rating: 5.0
Article rating: No rating
Article rating: No rating
Article rating: 4.5
Article rating: No rating
Article rating: No rating
Article rating: 4.2
Article rating: 5.0
Article rating: 4.0
Article rating: No rating
Article rating: No rating


All eyes on US elections and FOMC meet

Author: Veeresh Hiremath/Wednesday, November 14, 2018/Categories: Commodities

All eyes on US elections and FOMC meet

Since the beginning of this month, the global financial market including commodities has been keenly watching the developments in the United States of America from November 5 to November 9.

The first event was commencement of the US sanction on export of crude oil from Iran from November 4. As the sanctions came into effect, the US granted temporary waiver for import of Iranian oil to eight countries including India. This news, which was expected to have a positive impact on the global crude oil market, failed to cheer as oil production from US, Russia and Saudi Arabia simultaneously surged to 33 million barrels per day, a third of the global consumption of 100 million barrels per day.

Another American event that kept nerves taut was the US mid-term election, which was a litmus test for the Donald Trump administration. The Democrats took control of the congress in the mid-term election, while the Republicans retained control over the Senate. With the Democrats taking control of the congress, which is pro-interest rate hike, the Trump administration is set to witness strong opposition for his policies. This led to the rise in the dollar, thereby pressurising the commodities market. Gold and silver markets closed in the negative for six days consecutively with the gold and silver market heading towards the biggest weekly losses since mid-August.

Another important event was the US Federal Reserve’s policy meeting on November 7 and 8. It was expected that the Fed would raise interest rate by 25 basis points. However, the Fed maintained status quo on interest rates and hinted at a 25 basis points hike in December. The strong labour market conditions and inflation level, which is near 2 per cent of the Fed’s targeted rate, are conducive of a rate hike. In a scenario of rising interest rates, the dollar denominated commodities will suffer a setback and prices will fall further.

In the base metals segment, the markets remained gloomy with trade tensions between the US and China rising before the G20 summit in Argentina in the end of the month, where Presidents of both the countries are scheduled to meet. Chinese President Xi Jinping said he was willing to resolve issues with the US through dialogue if Washington respected its development path and interests. If the trade talks fail, then the US would be imposing tariffs on Chinese imports, which would further escalate the trade tensions between the two countries.

Veeresh Hiremath is head of research, Karvy Comtrade Limited

Print Rate this article:
No rating

Number of views (657)/Comments (0)

rajyashree guha

Veeresh Hiremath

Other posts by Veeresh Hiremath
Contact author

Leave a comment

Add comment



Ask the Finapolis.

I'm not a robot
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest



The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free