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US benchmarks on front foot at open as Fed meeting awaited

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9.50am: US stocks head higher

US benchmarks started the midweek session in New York higher as attention focuses on the Fed news later.

The Dow Jones Industrial Average added around 158 points at 34,078, while the S&P 500 went up over 16 points at 4,370. The tech laden Nasdaq index added over 26 points at 14,772.

In London, FTSE 100 added over 95 points, or 1.36%, at 7,075.

“Ahead of the outcome of the Federal Reserve’s policy meeting and Powell’s press conference later, the markets have stabilised further,” noted Fawad Razaqzada, analyst at ThinkMarkets.com.

“European indices were sharply higher by mid-day in London, lifting US futures, along with many other risk assets such as copper and oil. In FX, risk sensitive commodity dollars were firmer with the pound and yen weaking against the US dollar.”

7.10am: US futures making gains

US stock futures are climbing higher on Wednesday as all attention turns to the start of today’s Fed policy meeting.

Futures for the Dow Jones Industrial Average are up 222 points, while S&P 500 futures are trading more than 26 points higher. The Nasdaq exchange is ahead by around 56 points.

European shares rallied on Tuesday but Wall Street was more muted. The S&P 500 closed lower, off three points at 4,354; the Dow Jones had a more pronounced loss dropping 50 points to end the day at 33,919. The Nasdaq managed to edge out a gain, advancing 32 points to 14,746.

Traders today await more from the Fed on when it will begin easing back on its quantitative easing (QE) though Neil Wilson, analyst at Markets.com, suggested that what the US central bank says on interest rates may be of more significance.

In a note, he said this week’s meeting may be an “appropriate moment” for the Fed to give the market fair warning on tapering, or not.

“In a sense it doesn’t matter much what they say or don’t say on tapering – the risk lies in what the Fed does or doesn’t say about rate hikes. And though Monday’s market sell off may have caught the Fed off guard, with stocks just 4% off record highs there is not any reason for panic right now,” he said.

“Stocks have been rolling over since the weak jobs report, and Fed officials should be prepared to look through some softer data and mild pullbacks in equity markets,” he added.

Wilson noted there was a “broad consensus” in markets that the Fed would begin dialling back the pace of its stimulus measures this year, likely to be November, but maybe December.

Stock markets on both sides of the Pond have been jittery this week, not least due to the trouble in the Chinese property market, especially the situation of its largest home builder Evergrande.

Five more things to look out for on Wednesday:

The Evergrande saga rumbles on, with an onshore unit of the Chinese property giant saying on Wednesday it would make an interest payment on time this week but Evergrande is still expected to miss a separate payment due on its dollar bonds, which are widely held by international investors.

Data on existing US home sales for August will be released at 10am ET. Existing home sales recovered sharply to a 5.990 million annual rate in July and analysts expect August’s sales to decline slightly to a 5.900 annual rate.

Signals from the Federal Reserve will be closely watched by bond markets today. The yield on the US 10-year Treasury note rose to 1.328% Wednesday compared to 1.323% Tuesday. Yields rise when prices fall.

The US Energy Information Administration’s (EIA) weekly report on petroleum inventories is scheduled for release at 10.30am ET.

FedEx (NYSE:FDX) Corp has reported weaker-than-expected earnings for its first quarter, while sales exceeded estimates. The company has also lowered its guidance for full year 2021.

Story by ProactiveInvestors


Source: https://www.proactiveinvestors.com/companies/news/961017/us-benchmarks-on-front-foot-at-open-as-fed-meeting-awaited-961017.html


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