Dow futures -0.06% at 34900
S&P futures -0.13% at 4498
Nasdaq futures +-0.29% at 15428
FTSE +0.51% at 7730
Dax +0.72% at 15933
- Attention shifts to next week’s rate decision
- Arm looks to a quieter second day after 25% gains yesterday
- USD falls but is set for a 9th weekly gain
- Oil is set to rise for a third straight week
The Fed is likely to leave rates unchanged
US stocks are set to start the final day of the week modestly lower after solid gains in the previous session as investors look ahead to the FOMC rate decision next week and amid volatility on a triple witching options event.
Yesterday's hotter-than-expected data eased worries over a recession but didn't increase fears of another interest rate hike from the Federal Reserve next week. Currently, the market is pricing in a 97% probability that the Fed will keep rates unchanged, and the odds for a pause in November have increased to almost 65%, up from 50% a week earlier.
While the Federal Reserve, in the September meeting, could well signal another rate hike before the end of the year, there are rising expectations that they won't follow through with such a move.
Looking ahead, attention will now turn to US Michigan's preliminary reading for consumer confidence, which is expected to ease slightly to 69.1, down from 69.5. A stronger-than-expected print would be a positive for the US economy as higher consumer sentiment usually translates to higher consumer spending.
Separately, the market mood is also supported by stronger-than-expected data from China. Both retail sales and industrial production came in ahead of forecasts, fueling optimism that the Chinese economy could finally be turning a corner.
Arm Holdings will be in focus again on its second day of trading after rising 25% yesterday when it floated on the NASDAQ exchange. The stock is set to rise a further 1% on the open amid high demand after the IPO was five times oversubscribed.
Ford and General Motors are trading around 1% lower premarket after the United Auto Workers Union went on strike at their US factories. This marks one of the most far-reaching US industrial labour actions in decades.
Adobe is set to fall close to 3% on the open after the computer software maker provided a lukewarm sales outlook despite the optimism surrounding AI.
Dow Jones forecast – technical analysis.
The Dow Jones has extended its recovery, breaking above the 50 sma as it heads towards 35000 round number and 35100, the September high. The taking out of this resistance combined with the RSI above 50 keeps buyers hopeful of further upside. A rise above 35100 creates a higher high, bringing 35680, the 2023 high, into focus. On the downside, a fall below the 20 sma at 34625 could negate the near-term uptrend and open the door to 34300, the September low and 100 sma.
FX markets – USD falls, GBP falls
The USD is falling but is on track to bool gains across the week, which will mark the ninth straight week of gains after a string of data highlighting the resilience of the US economy and ahead of the FOMC rate decision next week.
EUR/USD is hovering around a six-month low after steep falls yesterday after the ECB raised interest rates by 25 basis points but lowered its growth outlook for the coming year. The market is increasingly convinced that this is the final rate hike from the ECB in this hiking cycle as a recession in H2 appears increasingly likely.
GBP/USD is holding steady on Friday and is set to book losses across the week, the second straight week of losses. The pound traded under pressure this week after UK GDP contracted in July by -0.5% more than expected and as unemployment ticked higher. All eyes are on next week's BoE rate decision, which will likely be a close call. However, with inflation over 3.5 times the BoE’s target, the risks are skewed towards another hike.
EUR/USD +0.1% at 1.0650
GBP/USD -0.04% at 1.2403
Oil is on track for a 3rd weekly rise.
Oil prices are on track for another weekly gain, marking the third straight week of rises amid tight supply combined with optimism that the Chinese economy could be stabilising after a period of weak growth.
Both oil benchmarks are set to rise around 4% across the week as supply concerns continue to be a driving force after Saudi Arabia and Russia extended 1.3 million barrels per day oil production cuts out to 2024.
Meanwhile, China, the world's largest oil importer and an economy considered crucial to oil demand rising over the rest of the year, posted better-than-expected industrial production and retail sales in August. The data followed figures that showed that the oil refinery processing in China rose by almost 20% compared to a year earlier.
WTI crude trades +0.3% at $89.90
Brent trades +0.3% at $93.50
15:00 US Michigan Consumer confidence