The New York Stock Exchange is set to open on a cautiously bullish note on Wednesday, with investors limiting their risk-taking just hours ahead of the Federal Reserve's monetary policy decisions.

Half an hour before the opening, futures contracts on the major New York indices were up 0.1% to 0.3%, heralding a green start to the session.

The Fed is expected to leave its policy unchanged at the end of its last meeting of the year, but investors will be watching for any changes in the wording of its speech.

In markets that are trading at record levels, and where valuations appear high, Wall Street could prove vulnerable to possible disappointments.

After seven consecutive weeks of positive performance, the market's optimism could be put to the test by the Fed's conclusions", warned Abdelhadi Laabi, Marketing Director at Kama Capital in Dubai.

"This meeting comes at a time when US inflation remains high without any real decline, as yesterday's consumer price figures showed", he stressed.

As a result, the Federal Reserve may try to cool the market's enthusiasm for the next rate cut", concludes the professional.

The latest indicators reflect the difficulties in bringing inflation down, with producer prices stagnating in gross terms in November compared with the previous month.

Excluding food, energy and business services, the PPI index even posted a month-on-month rise of 0.1%.

On the bond market, the ten-year Treasuries rate fell towards 4.18%, as some investors began to judge equity market valuations too high.

According to UBS strategists, the recent stock market 'rally' is set to moderate over the coming months.

"We see only modest upside potential for global and US equities", write the Swiss investment bank's teams in their latest market update.

With economic growth set to slow, we expect quality stocks to outperform', says the Swiss bank.

On the currency markets, the euro is edging upwards, not far from 1.0810 against the dollar, ahead of the ECB's monetary policy decisions, expected tomorrow.

On the oil front, crude prices remain stuck at their lowest levels since June, as the US Energy Information Agency (EIA) raised its production forecasts.

U.S. light crude (WTI) is nevertheless attempting to recover 1% to $69.3 a barrel, ahead of the release of weekly U.S. inventories later this morning.

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