US open: Futures hold steady ahead of the Fed minutes

 

 

US futures

Dow futures -0.04% at 31934

S&P futures +0.06% at 3945

Nasdaq futures +0.08% at 11780

In Europe

FTSE +0.51% at 7526

Dax +0.15% at 13950

Euro Stoxx  +0.26% at 3657

Learn more about trading indices

Key data & FOMC minutes due

US futures are holding steady on Wednesday after a mixed closed in the previous session, which saw tech stocks take a hammering.

The Nasdaq closed 2.3% lower, the S&P -0.8% and the Dow Jones managed a positive finish up 0.15%.

The mood in the market remains cautious as the deteriorating macroeconomic picture, reflected in weaker data, is starting to show up in corporate America, unnerving the markets.

US durable goods orders could shed more light on the health of the US economy. Expectations are orders to rise 0.5% in April after a 1.1% gain in May.

Looking ahead attention is on the release of the minutes from the May FOMC meeting when the Federal Reserve raised interest rates by 50 basis points and announced their plan for reducing the balance sheet, starting at $47.5 billion and ramping up to $95 billion by June.

More recently, and in light of the softer economic data, expectations of an overly aggressive Fed have eased.

The market expects two 50 basis point rate hikes from the Federal Reserve in June and July. However, should the minutes show that the Fed is reluctant to plan much beyond there, risk sentiment could take another hit.

In corporate news:

Nvidia is due to report after the close. Wall Street is expecting EPS of $1.30 on revenue of $8.13 billion. Attention will be on whether data centre sales overshadow gaming sales which  could see growth slow as the economy reopened.

Where next for the S&P500?

The S&P500 continues to trade within a falling channel dating back to early December. Whilst the price has picked up off 3810 but has run into resistance around 3980 the weekly high. The RSI is at 39, below the 50 level so indicates that there could be more downside to come. Sellers need to break below 3860 the May 12 low in order to test 3810 the 2022 low and continue the bearish trend. Buyers look for a move over 3980 the weekly high to expose the 20 sma at 4043. It would take a move over 4100  the mid May high, to create a higher high.

 

FX markets – USD rises, EUR falls

USD is rising from a monthly low, trading treasury yields higher ahead of key US data and the minutes to the May FOMC meeting. The US dollar has come under pressure recently as the economic downturn, evident in weaker US data forced markets to rein in aggressive Fed bets.

NZD/USD has failed to hold onto gains after the RBNZ hikes interest rates by 50 basis points, taking the rate to 2%. The move was widely expected and is the second outsized rise in as many meetings. The central bank also signaled to more 50 basis point rate hikes to come.

EUR/USD is falling after a strong start to the week. The EUR trades lower despite an upward revision to German Q1 GDP data to 3.8% YoY, up from 3.7%. However, QoQ the growth rate was confirmed 0.2%. German consumer confidence steadied at -26 in June, just mildly off the record low of -26.6 reached in May.

NZD/USD  -0.06% at 0.6468

EUR/USD  -0.6% at 1.0675

Oil edges higher

Oil prices continue to trade in a tight range as investors weigh up the prospect of stronger demand as the US driving season ramps up, against the prospect of tighter supply as buyers avoid Russian oil.

The EU still hasn’t approved its phased-in ban of Russian oil imports but optimism remains among ministers and within the oil markets that this will be achieved soon. Given the lengthy delay since the proposal and Hungary still not getting behind the deal, it is by no means fully priced in. With that in mind, any signs of the deal being agreed on will likely lift oil prices.

Meanwhile, in the US Memorial Day travel is expected to be the busiest in two years which will cause a rise in fuel demand, despite high prices. The ramping up of the driving season is already being noted in API data which showed that gasoline inventories fell by 4.2 million barrels last week.

EIA crude oil stock pile data is due later today.

 

WTI crude trades +0.8% at $110.17

Brent trades +0.79% at $111.00

Learn more about trading oil here.

Looking ahead

13:30 US durable goods orders

15:30 EIA crude oil inventories

19:00 FOMC minutes

21:30 API oil inventories

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