Tuesday March 19th

19-03-2019

Dow set to rise more than 100 points as investors await Fed meeting

U.S. stock index futures traded higher on Tuesday, broadly supported on expectations the Federal Reserve could strike a dovish tone at its latest monetary-policy meeting. At around 7 a.m. ET, Dow Jones Industrial Average futures indicated a gain of 128 points at the open. Futures on the S&P 500 and Nasdaq 100 also rose. The Fed is set to kick off its two-day policy meeting later in the day. Market expectations for a rate hike are at zero, with most investors pricing in no change in policy. However, investors will look for clues on the Fed's economic outlook. The Fed is also expected to lower its interest rate forecasts — or "dot plots" — to show little or no further tightening in 2019. With global economic growth appearing to slow, most market participants anticipate the U.S. central bank to adopt a cautious tone. At its January meeting, the Fed indicated it will be "patient" in raising rates. That shift came after the central bank raised rates in December, sparking concern the Fed may be tightening too fast. "My expectations are that the Fed will maintain their dovishness," said Gregory Faranello, head of rates at Roberts & Ryan. "The eyes will be on the dot plot, so I expect some tempering there as well." "The one potential are of concern would be if the data was not cooperating with the pivot," Faranello said. "When we look at what's going on on a global basis, [Fed Chairman Jerome Powell] has pointed to the headwinds, and those headwinds are still there." On the data front, January factory orders numbers are due at 10 a.m. ET. Meanwhile, on the earnings front, FedEx and Tencent Music are expected to report after the bell. Shares in Asia were tepid on Tuesday, ahead of a closely watched meeting by the U.S. Federal Reserve set to kick off later in the day stateside. Mainland Chinese shares were mixed on the day, with the Shanghai composite slipping 0.18 percent to 3,090.98 and the Shenzhen component largely flat at 9,839.74. The Shenzhen composite advanced 0.176 percent to 1,688.76. In Hong Kong, the Hang Seng index rose around 0.1 percent in its final hour of trading. Japan's Nikkei 225 closed slightly lower at 21,566.85. The Topix index declined 0.21 percent to finish at 1,610.23. Over in South Korea, the Kospi closed fractionally lower at 2,177.62. Oil prices struck new 2019 highs on Tuesday, supported by supply cuts led by producer club OPEC. U.S. sanctions against oil producers Iran and Venezuela are also boosting prices, although traders said the market may be capped by rising American output. Brent crude oil futures were up 20 cents at $67.74 per barrel around 7:20 a.m. ET (1320 GMT). The international benchmark for oil prices rose to its highest level since Nov. 16 earlier in the session. U.S. West Texas Intermediate futures were at $59.49 per barrel, up 40 cents from their last settlement. WTI also hit an intraday peak going back to Nov. 12. Palladium hit its highest ever on Tuesday, crossing the $1,600 an ounce mark for the first time as news that Russia is planning to ban exports of precious metals scrap fueled concerns over an already supply-constrained market. Spot palladium was up .6 percent at $1,593 an ounce, having hit a record high of $1,606 earlier in the session. Meanwhile, gold held firm above the key psychological $1,300 level as expectations that the U.S. Federal Reserve will strike a dovish tone on interest rates at its policy meeting this week kept the dollar under pressure. Gold, which bears no yield, tends to suffer when interest rates are rising. Spot gold gained 0.41 percent to $1,308.78, while U.S. gold futures were 0.55 percent higher at $1,308.70.