Monday June 17th

17-06-2019

Stock futures rise as investors brace for this week’s Fed meeting

U.S. stock index futures were higher on Monday as investors look ahead to a crucial Federal Reserve meeting this week. Around 6:45 a.m. ET, Dow Jones Industrial Average futures indicated were up 17 points, pointing to a gain of 36 points at the open. S&P 500 and Nasdaq 100 also rose. The Fed is scheduled to start a two-day monetary policy meeting on Tuesday. Expectations for any policy changes are low, but investors will look for clues about potential rate cuts in July and later in 2019. Investors are betting on the Fed cutting rates in July and September as well as December, according to the CME Group’s FedWatch tool. The market has been clamoring for lower rates amid indications of potentially slower economic growth. In theory, lower rates would boost economic growth. “Changes in the post-meeting statement and the updated dots will point in the direction of a cut at the next FOMC conclave at the end of July,” said Doug Peta, chief U.S. investment strategist at BCA Research, in a note. “Against a backdrop of uninspiring global growth, taking out some monetary policy insurance to protect against increasing trade frictions may well be a prudent course of action, especially in a low-inflation environment.” He added, however, that expectations for three rate hikes before year-end are too aggressive. The Fed will make its monetary-policy announcement on Wednesday. Fed Chair Jerome Powell is scheduled to hold a news conference after the announcement. Equities posted slight gains last week, adding to this month’s strong rally. The S&P 500 and Nasdaq were both up more than 4% in June entering Monday’s session while the Dow was up 5.1%. In terms of data, the New York Fed’s Empire State business conditions index took a sharp turn for the worse in June, falling into negative territory for the first time in more than two years. The Empire State manufacturing index plummeted 26.4 points to negative 8.6 in June, the New York Fed said Monday. That’s a record decline. Economists had expected a reading of positive 10, according to a survey by Econoday. Any reading below zero indicates a contraction in activity. The last time the index was negative was in October 2016. The National Association of Home Builders housing index is due at 10 a.m. ET. Stocks in Asia were mixed on Monday as investors await a U.S. Federal Reservemeeting set to happen later in the week stateside. Mainland Chinese stocks were mixed on the day, with the Shenzhen composite down 0.195% to 1,502.12 and Shenzhen component slipping 0.33% to 8,780.87. The Shanghai composite on the other hand, rose 0.2% to 2,887.62. In Hong Kong, the Hang Seng index rose around 0.5% as of its final hour of trade. Over in Japan, the Nikkei 225 in Japan closed just above the flatline at 21,124.00, while the Topix slipped 0.45% to end its trading day at 1,539.74. In South Korea, the Kospi shed 0.22% to close at 2,090.73. Oil prices slipped on Monday as signs of an economic slowdown amid international trade disputes began to outweigh supply fears stoked by attacks on oil tankers in the Gulf of Oman last week. Brent futures fell 69 cents, or 1.1%, to $61.35 a barrel, having gained 1.1% on Friday. U.S. West Texas Intermediate (WTI) crude futures were down 54 cents, or 1%, at $51.97, having firmed by 0.4% in the previous session. Gold retreated further on Monday from a 14-month peak hit in the previous session as the dollar strengthened on strong U.S. retail sales data before the U.S. Federal Reserve meeting this week. Spot gold was down 0.6% at $1,333.81 per ounce. Gold had hit $1,358.04 on Friday, its highest since April 11, 2018. U.S. gold futures slipped 0.5% to $1,341.70 an ounce.