Wednesday September 18th

18-09-2019

Stock futures slip as Fed decision looms

U.S. stock index futures were set to open slightly lower Wednesday morning as a key policy decision from the Federal Reserve loomed. Around 7 a.m. ET, Dow Jones Industrial Average futures indicated a loss of 27 points at the open. S&P 500 and Nasdaq 100 futures also pointed to slight losses. The Fed is expected to cut rates by 25 basis points despite a recent fall in energy prices. This would be the bank’s second rate cut in a decade, after the central bank decided to lower the Fed Funds Rate to a range of 2.0%-2.25% in July. Chairman Jerome Powell will address the media on Wednesday at 2:30 p.m. ET. Treasury yields fell ahead of the Fed’s announcement. The benchmark 10-year rate dipped to 1.77% from around 1.8%. The 2-year yield traded at 1.7%.  The Fed meeting takes place a couple of days after President Donald Trump called the central bank “boneheads” and asked for zero or even negative rates. The meeting also takes place as China and the U.S. try to reach a deal to end their ongoing trade war. Trump said on Wednesday that a deal could come soon. China and the U.S. are expected to meet next month. The trade war has dampened the outlook for global economic growth and corporate profit expansion. FedEx slashed its fiscal 2020 earnings guidance. The company also posted weaker-than-expected quarterly results, citing “a weakening global macro environment driven by increasing trade tensions.” FedEx shares dropped 11% in the premarket Wednesday. Stocks in Asia Pacific were mixed on Wednesday as investors awaited the U.S. Federal Reserve’s interest rate decision, set to be released later stateside. In mainland China, shares were up on the day, as the Shanghai composite gained 0.25% to approximately 2,985.66 and the Shenzhen component added 0.31% to 9,753.31. The Shenzhen composite also rose 0.258% to about 1,655.61. Hong Kong’s Hang Seng index was fractionally higher, as of its final hour of trading. Elsewhere, the Nikkei 225 in Japan slipped 0.18% on the day to 21,960.71 while the Topix fell 0.49% to close at 1,606.62. South Korea’s Kospi ended its trading day 0.41% higher at 2,070.73. Oil prices retreated on Wednesday, extending the previous day’s decline after Saudi Arabia said it would quickly restore full production following last weekend’s attacks on its facilities. Tension in the Middle East remained elevated, however, after Saudi Arabia said it would provide evidence on Wednesday linking Iran to the attacks. The United States had already said it believed the attacks against the world’s top oil exporter originated in southwestern Iran. Iran has denied involvement in the strikes. Brent crude oil futures were down 28 cents, or 0.4%, at $64.27 a barrel by 1108 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 45 cents, or 0.8%, at $58.89. Gold consolidated around the $1,500 level on Wednesday, keeping to a $3 range ahead of a U.S. Federal Reserve decision on monetary policy, while fears of oil-led inflation ebbed, limiting safe-haven inflows into bullion. Spot gold was steady at $1,501.34 per ounce. U.S. gold futures dipped 0.2% to $1,510 per ounce.