US open: Futures pare earlier losses as the Fed meeting begins

US futures

Dow futures +0.25% at 33798

S&P futures +0.28% at 4034

Nasdaq futures +0.33% at 11954

In Europe

FTSE -0.45% at 7749

Dax -0.2% at 15099

Learn more about trading indices

Q4 employment costs index is weaker than forecast

US futures have reversed earlier losses after data supported the view that inflation is trending lower as the Fed’s highly anticipated two-day meeting kicks off and as more corporate earnings roll in.

Stocks fell sharply yesterday, dragged lower by the Nasdaq, amid cautions that the Fed may not be as dovish as the market has been hoping for. Growth stocks have outperformed so far this year so some profit-taking ahead of the main event, the Fed’s rate announcement, was in play.

Today, the mood has perked up again afterQ4 employment costs data was weaker than expected suggesting the labour costs are rising at a slower pace, which supports the cooling inflation narrative.

Adding to the upbeat mood, IMF said that it sees a turning point in the global economy, raising its growth outlook for the first time in a year. Global GDP is set to rise 2.9% up 0.2% from the forecast in October. The IMF sees inflation slowing to 6.6% this year, down from 8.8% in 2022.

Earnings are very back in focus, with earnings from Amazon, Apple, Alphabet, and Meta due later this week. There are also some jitters over those numbers if Microsoft is anything to go by.

Corporate news

Exxon Mobile holds steady despite record profits. The oil major reaped the benefits of higher oil prices, with full-year profits jumping 157% from 2021 to $59.1 billion. The firm failed to announce an extension of the buyback programme, limiting gains pre-market.

Snap was the canary in the coal mine in the last earnings season; will we see a repeat? Revenue is set to grow 0.5%, marking the slowest pace of growth since the stock went public in 2017. Snap is set to add 15.5 M users in Q4.

Where next for the Nasdaq?

FX markets – USD rises, GBP falls

The USD is pushing cautious higher for a second straight session as investors look ahead to the Federal Reserve interest rate decision tomorrow. the rising dollar suggests investors ah nervous ever whether the Federal Reserve and, more specifically, Fed chair Jerome Powell will be dovish as the market had been pricing in.

GBP/USD is falling after the IMF downwardly revised its growth forecast for the UK. the IMF considers that the UK economy will contract by 0.6% in 2023. This is the weakest growth forecast of the G7 nations.

EUR/USD is showing resilience against the stronger U.S. dollar after data revealed that the eurozone economy avoided a recession and unexpectedly grew in the final quarter of last year. Eurozone GDP rose 0.1%, ahead of the 0% stagnation that was forecast. The data comes after recent data from the bloc has suggested that the bloc’s economy is performing better than expected, apart from Germany, which saw a surprise contraction and tumbling retail sales.

GBP/USD -0.23% at 1.2315

EUR/USD +0.03% at 1.0850

Oil falls for a second day

Oil prices are falling extending losses from the previous session and hitting a two week low on the back of a stronger dollar and rising Russian crude supply.

U.S. dollar is pushing higher for a second day and risk assets are out of favor ahead of the highly anticipated Federal Reserve meeting. Between central bank meetings and the OPEC+ meeting tomorrow, they should be some strong clues about the outlook for oil supply and demand. OPEC is widely expected to keep output unchanged.

Reports of ample Russian supply, despite the West’s sanctions on Moscow, haven’t prevented Russian supply from rising, according to oil loading data from Russian ports.

Elsewhere the oil market is shrugging off better-than-expected China PMI data, even though China reopening remains supportive for oil prices.

WTI crude trades -0.63% at $75.60

Brent trades at -0.65% at $84.05

Looking ahead

N/A

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.