Expect 25 bps rate hike from US Fed this week, says Daiwa Capital

He further said that we need to see if a peace treaty is signed between the US and North Korea.

“The one possible outcome that could be very interesting from market perspective although we cannot put a high probability but a non-zero probability is the denuclearisation and detente that brings about market based reform in North Korea,” said Kitney.

Talking about the Fed meet, he said, “I think consensus is going to be right about the near-term rate hike. It’s consistent with gradual policy normalization path that the Fed is flagged.”

Kitney expects the US Federal Reserve to raise interest rates by at least 25 basis points on Wednesday. One basis point is one-hundredth of a percentage point.

Talking about the US stocks, he said, “If we look at the US market, it has been in a consolidation phase for several months. We had a correction and it began in late January. So we are into the fiscal month. This is a similar order of magnitude in terms of time that we saw in the last 10 percent plus correction that has occurred since the global financial crisis which was Q4 2015, Q1 2016”.

"If you look inside the US market," Kitney said, "we can see Nasdaq has recently already broken into new highs. S&P gradually shifting higher. My view is that we are getting towards the end of this corrective phase and the concerns over rising bond yields and trade fiction are overdone. I think we are pretty much close to that point", added Kitney.