European markets slumped on Tuesday, following falling Asian shares. The Bank of Japan (BOJ) released a report indicating that the Japanese economy will not meet forecasts. The yen was pushed higher on the news. Precious metals and oils slumped following the BOJ announcement.
A two-day Federal Reserve policy meeting in the United States begins Tuesday, resulting in a stagnate market that is expected to open lower.
Analysts predict that the policy meeting will signal a slower pace of interest rate increases. The European Central Bank (ECB) and the BOJ have both pushed into negative rates in an attempt to bolster their respective economies.
“Dot plot” charts used by the Fed in December suggested the potential to raise interest rates four times in 2016 following the first rate hike in nearly a decade in December. Economists forecast that struggling Asian and European markets will result in the Fed lowering rate increase forecasts to two or three increases in 2016.
The United States economy is strengthening, according to recent data, following fears of a potential recession earlier in the year.
Germany’s DAX is down 0.51%, France’s CAC 40 is down 1.05%, and the FTSE 100 is down 0.57% on Tuesday afternoon. United States markets are also down on the day in early morning trading. The S&P 500 is down 0.63%, the Nasdaq is down 0.73%, and the Dow Jones is down 0.37% on the day.
Oil prices are down on the day after a major loss on Monday of 4% following the announcement that OPEC expects lower demand for crude more than previously forecasted. Brent crude is trading at $38.53, down $1 on Tuesday morning.
U.S. Treasury yields are down in anticipation of the Fed meeting. Ten-year yields are at 1.93%, down 3 basis points on the day.
Japan’s Nikkei 225 index closed the day down 0.68%.