While both the Fed decision and the Budget will influence the market today, the focus will be on the Budget. Even though the interim Budget is expected to be largely a vote on account with “no sensational announcements” the PM’s statement yesterday that it will be a ‘blueprint of intent’ has aroused expectations that there will be some significant indications of what is likely to come in the full Budget and beyond. This will keep the market focused on the Budget.
The 1.61% sell-off in the S&P 500 yesterday was in disappointment that rate cut will not happen in March. But the Fed chief’s comment that the economy is doing well with 3.1% GDP growth in 2023, low 3.7% unemployment and consumer price inflation declining to 2.6% augurs well for the market, going forward.
Sectoral and stock-specific moves in response to budget proposals will hog the limelight today. But long-term investors should not be carried by the dramatic moves today and may focus on high quality stocks with good long-term growth prospects.
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