Wednesday May 18th

18-05-2016

Fed minutes to loom large on Wall Street

U.S. stock index futures traded lower early on Tuesday, as European and Asian stocks declined amid renewed concerns the Federal Reserve may hike interest rates in the near-term. The Federal Reserve Open Market Committee (FOMC) is set to publish the minutes from its April meeting at 2 p.m. ET on Wednesday.  Concerns the FOMC may be more hawkish on a second rate hike were piqued on Wednesday when San Francisco Fed President John Williams and Atlanta Fed President Dennis Lockhart said the central bank could still raise two or three times this year, according to Reuters. Plus, the Labor Department reported inflation accelerated to 0.4 percent in April, in its largest gain since February 2013, according to Reuters. This suggested increasing crude oil prices are feeding through to overall price levels, potentially providing grounds for the Fed to hike. "Relaxed investors who thought there would be no rate hike in the near-future due to the fact the economic data doesn't warrant it, especially given the inflation numbers, had a rude wake-up call yesterday," Naeem Aslam, market analyst at Think Forex, said in a note on Wednesday. "It is thought the Fed minutes could be a lot more hawkish than many are expecting. If the Fed is going to take the leap of faith again and are serious about the rate hike due next month, then perhaps they will look at increasing the volume on this (raise)," Aslam said. Major U.S. companies reporting quarterly results on Wednesday include Cisco Systems. Early in the day, Lowe's posted better-than-expected earnings of 98 cents per share for the first quarter. Staples reported earnings per share of 17 cents per share, versus the 16 cents expected. Also on Wednesday, Goldman Sachs upgraded Tesla shares to "buy" from "neutral," saying the current stock price did not to capture the company's "disruptive potential." In a separate report, the bank said it had cut its outlook on global equities to "neutral" for the next 12 months, citing valuation and growth concerns. The benchmark Nikkei 225 index spent the session like a cat at a door, unwilling to decide if she wanted to stay in or out, before ending up flopped in the doorway, with the indicator ending down just 0.05 percent, or 8.11 points, at 16,644.69, after oscillating between positive and negative. Hong Kong's Hang Seng Index shed 1.54 percent by 3:03 p.m. SIN/HK time. On the mainland, the Shanghai Composite ended down 1.28 percent, or 36.53 points, at 2807.15, and the Shenzhen Composite finished off 2.68 percent, or 48.60 points, at 1766.08. South Korea's Kospi index shed 0.58 percent, or 11.33 points, to end at 1956.73. Oil futures stabilized on Wednesday as the impact of unplanned supply disruptions from Nigeria and Canada were tempered by rising supplies from elsewhere. International Brent crude futures were trading 5 cents above their last settlement at $49.33 a barrel at 7:20 a.m. ET (1120 GMT). The contract hit a 2016 high of $49.75 in intra-day trade the previous day. U.S. West Texas Intermediate crude futures were 20 cents higher at $48.51 a barrel, off a 2016 high of $48.76 per barrel struck on Tuesday. Gold fell almost one percent on Wednesday as the dollar hit a three-week high after strong U.S. economic data and comments from Federal Reserve officials bolstered expectations that the central bank could soon hike interest rates. Spot gold dipped 0.7 percent to $1,271.60 an ounce at 0916 GMT, while U.S. gold futures fell 0.3 percent to $1,273.20.