The Federal Reserve is expected to leave monetary policy unchanged when it concludes its two-day meeting Wednesday but investors will be looking for signals if the Fed may consider scaling back its support for financial markets. The QE program is widely expected to be maintained at $80 billion of Treasuries and $40 billion of Mortgage-Backed Securities and the central bank is seen reinforcing it will not pull it back anytime soon. However, more near-term inflation pressures arising from the economic recovery and substantial fiscal stimulus could lead policymakers to tighten their policy early than initially expected. The Fed is also seen renewing its pledge to keep borrowing costs low for as long as necessary and do whatever it can to help the economy recover from the coronavirus-hit. The central bank left the target range for its federal funds rate unchanged at 0-0.25% and its QE programme on hold during its December 2020 meeting, in line with forecasts.

The Swiss investor sentiment index fell by 3.6 points from the previous month to 43.2 in January of 2021, as businesses remain optimistic despite the new variants of coronavirus, with the majority assuming that most restrictions will be lifted by the middle of the year. However, they believe that the existing fiscal measures will have to be extended for the time being, especially the hardship assistance program. Meanwhile, the current conditions subindex fell to -34.1 from -31.9.

Oil prices rose more than 0.5% on Wednesday, with WTI trading near $53 a barrel and Brent crude above $56 a barrel, after the American Petroleum Institute data showed crude oil inventories in the United States unexpectedly fell by 5.3 million barrels in the week to January 22nd. Also, traders welcomed reports that China, the world’s second-biggest oil importer, reported the lowest daily rise in COVID-19 cases in over two weeks, ahead of the Lunar New Year festival. On the supply side, Iraq is cutting its oil output to compensate for excess production over its OPEC+ output quota. Traders now await official oil inventory data from the US EIA later in the day.

Dow Jones and S&P 500 futures were lower while the Nasdaq booked gains on Wednesday as investors await more big-tech earnings reports and the Fed's monetary policy decision later in the day. Earnings from Microsoft, Starbucks and Advanced Micro Devices released on Tuesday after the closing bell beat forecasts. AT&T, Boeing and Abbott are expected to release today before markets open while Apple, Facebook and Tesla are due after the close. The Fed will likely leave the fed funds rate and the QE programme on hold but investors will be looking for clarity on tapering. On Tuesday, the Dow Jones lost 23 points or 0.1% to 30,937. The S&P 500 shed 6 points or 0.2% to 3,850. The Nasdaq retreated 10 points or 0.1% to 13,626. .

European stocks traded mostly lower on Wednesday, with Frankfurt's DAX 30 retreating 0.3% amid concerns over coronavirus infections as the pandemic is far from controlled and global cases topped 100 million, according to Johns Hopkins data. Meanwhile, investors await the Federal Reserve monetary policy decision later in the day. On the data front, the GfK consumer confidence for Germany fell for the 4th month to the lowest in 8 months. Consumer confidence in France also came below forecasts.

Consumer confidence in France decreased to 92 in January of 2021 from 95 in December, missing market expectations of 94. The decline was mainly driven by a deterioration in expectations for the standard of living (-51 vs -42), household financial situation (-9 vs -4), major purchases intentions (-19 vs -13) and unemployment (76 vs 68). Meanwhile, savings intentions increased (38 vs 27). The index remains below its long-term average of 100 since March when the coronavirus pandemic started.

The Shanghai Composite added 3.91 points or 0.11% to 3573.34 on Wednesday, following losses of 1.51% in the previous session as investors evaluated comments by China’s central bank governor that policymakers will maintain their loose monetary policy to support growth. In addition, PBoC’s Yi Gang said that Ant would be able to resume its initial public offering on the condition that the digital payment service provider complies with the country’s laws and regulations. Alibaba rallied 2.6% in Hong Kong trade following the news. In local data, industrial profits surged 20.1% yoy in December, rising 4.1% for the full year of 2020, as domestic economic recovery from the pandemic gained traction. In Hong Kong, the Hang Seng Index fell 61.72 points or 0.21% to 29329.54.

The Nikkei 225 added 89.03 points or 0.31% to 28635.21 on Wednesday, following losses of 0.96% yesterday as investors cheered news that the IMF raised its forecast for global economic growth in 2021, saying the coronavirus-triggered downturn last year would be nearly a full percentage point less severe than expected. On the coronavirus front, President Yoshihide Suga admitted Japan's medical system has been ill-prepared to deal with the surge in COVID-19 patients, acknowledging that more lives may have been saved had proper treatment been available, as Japan reported 3850 fresh novel coronavirus infections Tuesday. Among individual stocks, Nitto Denko jumped 7.91% after it raised its annual operating profit forecast to US$867.89 million. In local data, the index of leading economic indicators increased to 96.4 in November, the highest reading since February 2019, while the index of coincident economic indicators was revised lower to 89.

The Finnish consumer confidence indicator increased to -0.9 in January of 2021 from -4.6 in the previous month. This was the strongest reading since October 2018, as all the major components improved clearly from the previous month: expectations concerning their own economy (10.8 vs 8.5 in December of 2020), Finland's economy in 12 months (-2.5 vs -13.9), consumers’ own economy now (3.2 vs 2.8) and views on intentions to spend money on durable goods in the next 12 months (-14.9 vs -15.8).