Poll results to US Fed meet: 5 events markets will watch out for in March

From election results to US Fed meet, March 2017 is full of events that may trigger the markets.

From the outcome of ongoing assembly polls, especially in Uttar Pradesh (UP), to the statements from the US Federal Reserve, March 2017 is full of events that may prove to be a trigger for the markets.

Since December 2016 low, the markets have gained steady ground, with the S&P BSE Sensex and the Nifty50 indices rallying up to 12% each. The up move in the mid-and small-cap segment has been sharper, with their respective indices gaining nearly 18%.

“Things are looking good for the markets in the coming month as the whole financial year (April-March) has been positive. Last year March, Nifty50 ended at 7,738 levels and has already climbed to 8,900 levels – up almost 1,200 points,” said AK Prabhakar, Head of Research, IDBI Capital.

Adding: “People are more or less confident that Bharatiya Janata Party (BJP) will win in the UP Polls; and even if they lose, the margin won’t be big. Demonetisation impact has not been much of a dampener, as was expected. Markets won’t be affected much in case BJP loses, but in case of a BJP win, we may see the indices reaching their all-time highs.”

Here are the key events markets will watch out for in the coming month:

 
March 1: President Trump's Address to Congress

President Donald Trump will make his first major address to Congress at 2:30 am (IST) on Tuesday. Investors remain hopeful he will shed light on his economic agenda, most notably the tax reform.

Street will also pay close attention to comments about a potential border adjustment tax, which would put a 20% tax on imports into the US but not tax exports. Beyond tax reform, Trump will also focus on his plans for repealing the Affordable Care Act, reducing regulations on businesses and increasing infrastructure spending.

Analysts warn that market sentiment could take a hit if Trump's plans look slow to execute or are overly vague.

President Trump has been credited with being a major catalyst behind the stock market's impressive rally in recent weeks, although he has yet to outline his economic policies in detail.

March 9 & 10: EU Summit

Markets will also watch out for the EU summit, to be held on March 9 and 10, where British PM Theresa May could trigger Britain’s exit from the European Union (EU). Though, Brexit Minister David Davis said that the government is aiming for March-end.

According to reports, the British government is still waiting for the upper house of parliament, where debate on the draft law is due next week, to pass the bill giving Prime Minister Theresa May the authority to trigger the exit from EU. The lower house of parliament did that on February 9.

The timetable is for a final vote in the House of Lords is on March 7 and the UK budget will be out March 8.

March 11: Assembly election results

Back home, elections results for the 5 states – Punjab, Goa, Manipur, Uttarakhand and Uttar Pradesh will be one of the most eyed event for the markets in the coming month.

Even though election results of the other four states are also due on March 11, the outcome of UP will be crucial as it will be a test of the BJP's popularity on the ground, especially after the demonetisation move.

Most experts say that the outcome may not affect the market largely but if BJP ends up winning more than 150 seats, it would be a sentimental positive for the markets. They believe that volatility may be sparked only if the seat share difference between the BJP and the party or alliance that secures the most seats is significantly large.

March 15-16: US Fed meet

Investors will also focus on the US Fed meet, to be held on March 15-16, as Janet Yellen has signalled an aggressive rate hike path in calendar year 2017 (CY17).

US Fed chai Janet Yellen, in her previous speech, hinted that the US central bank could consider raising short-term interest rates at its next policy meeting in March besides remaining positive on the road ahead for the economy in her testimony to Congress.

“If job gains and rising inflation continue as the Fed expects, an increase in the benchmark federal-funds rate likely would be appropriate “at our upcoming meetings,” Yellen said at her semi-annual monetary policy report to the Senate Banking Committee.

Central bank officials last lifted the fed-funds rate in December to a range between 0.50% and 0.75%. They held the rate steady at their January 31-February 1 meeting. Yellen will also speak on Friday, March 3 on the economy to the Executives Club of Chicago.

All though March: Key economic data

March will also see a list of economic data which may impact global markets. US will release revised figures on fourth-quarter economic growth while Japan and eurozone will also announce their Q4 GDP numbers. European Central Bank (ECB) and Bank of England (BoE), too, will review their interest rates on March 9 and 16, respectively.  Back home, January’s industrial production and manufacturing output will be announced on March 10 while CPI and WPI on March 13-14.