Wednesday June 13th

13-06-2018

US stock futures inch higher ahead of Fed decision; media shares climb

U.S. stock index futures inched upward ahead of Wednesday's open as Wall Street awaited the Federal Reserve's decision on monetary policy. Around 8:42 a.m. ET, Dow futures rose 30 points, indicating a positive open of 15 points. The Nasdaq and the S&P 500 futures indicated a flat to upbeat start to the session for their respective markets. Investors are awaiting the culmination of the Fed's two-day meeting at 2 p.m. ET, when the central bank will announce its next monetary policy decision. Fed Chair Jerome Powell and his colleagues are expected to announce a quarter-point increase in interest rates as the central bank seeks to normalize monetary policy with the economy showing signs of health. The Labor Department reported Tuesday that its consumer price index, often viewed as an inflation barometer, increased 2.8 percent in the 12 months through May, the biggest advance since February 2012, after rising 2.5 percent in April. A slowdown in the climb of gasoline prices helped dampen the movement upward, though core CPI, which excludes volatile food and energy costs, also rose 0.2 percent. The year-over-year increase in core CPI is now 2.2 percent. Producer prices in May increased more than expected for their largest annual increase in nearly 6.5 years, according to the government. The Labor Department said Wednesday its producer price index rose 0.5 percent last month boosted by a rally in gasoline prices and increased service costs. In the 12 months through May, the PPI increased 3.1 percent. While U.S. markets have remained comparatively calm over the past two weeks, stricter monetary policy from the Fed, as well as more hawkish commentary from the ECB, appeared to stress certain debt-heavy economies like those of Italy and Brazil. The ECB will hold its policy meeting on Thursday. The institution's chief economist, Peter Praet, said last week that the central bank will discuss how it will wind down its bond-buying program at the meeting, a move that could affect rates worldwide. Investors were also focused on the media and telecommunications industries following a U.S. District Court's decision to allow AT&T's $85 billion bid for Time Warner. The federal judge's ruling did not impose conditions on the merger's approval, clearing the way for other vertical deals involving Twenty-First Century Fox, the Walt Disney Company, Comcast and others. The approved AT&T-Time Warner deal gives the pay-TV provider ownership of cable companies such as HBO and CNN as well as film studio Warner Bros. Shares of AT&T and Disney fell 4.3 percent and 1.8 percent, respectively, in premarket trading while Time Warner and Fox rallied 3.7 percent and 8 percent. Politics is however still likely to be on investors' minds, as markets evaluate the outcome of a meeting between President Donald Trump and North Korean leader Kim Jong Un, who both signed an agreement Tuesday that committed to "complete denuclearization." Most Asian markets closed lower on Wednesday as investors shifted their focus from the recently concluded U.S.-North Korea summit to the conclusion of the Federal Reserve's June meeting later in the day. Greater China markets saw sharper losses. In Hong Kong, the Hang Seng Index lost 0.99 percent by 3:05 p.m. On the mainland, the Shanghai composite fell 0.97 percent to 3,049.80. The smaller Shenzhen composite lost 1.58 percent to end at 1,731.43. Japan's Nikkei 225, however, bucked the trend to edge up by 0.38 percent, finishing the day at 22,966.38. Markets in South Korea and Indonesia were closed on Wednesday. Oil prices fell on Wednesday, hit by rising supplies in the United States and expectations that producer group OPEC could relax voluntary output cuts. Benchmark Brent crude was down 30 cents at $75.58 a barrel by 0910 GMT. U.S. light crude was 20 cents lower at $66.16. The Organization of the Petroleum Exporting Countries and some non-OPEC producers, including Russia, started withholding output in 2017 to reduce a global supply overhang and prices have risen by around 60 percent over the last year. But the outlook for the oil market in the second half of this year is uncertain, analysts say, and OPEC argues there are downside risks to global demand. OPEC and other producers will meet on June 22-23 in Vienna to discuss future production policy. Gold prices held steady on Wednesday after falling to a one-week low in the previous session, as investors waited for clues on the pace of future interest rate hikes by the U.S. Federal Reserve when its policy meeting concludes later in the day. Spot gold was little changed at $1,295.02 per ounce at 0634 GMT after it touched a one-week low of $1,292.60 in the previous session. U.S. gold futures for August delivery were 0.1 percent lower at $1,298.50 per ounce.