US open: Futures rise ahead of Fed announcement

Stocks on Wall Street look set to open higher as the Evergrande can is kicked down the road and as the Fed announcement is awaited. With expectations of a hint towards tapering, the risk is that the Fed fails to provide sufficient details.

USA (2)

US futures

Dow futures +0.5% at 34110

S&P futures +0.5% at 4377

Nasdaq futures +0.34% at 15081

In Europe

FTSE +1.5% at 7070

Dax +0.9% at 15447

Euro Stoxx +0.9% at 4135

Stock aim higher as risk sentiment rises

US stock are set to open higher on Wednesday as investors breathe a sigh of relief over the latest Evergrande developments and ahead of the Federal Reserve’s monetary policy announcement.

Evergrande defied expectations and announced that it will make a domestic coupon payment tomorrow. Whilst this is unlikely to be the end of the drama surrounding the Chinese real estate firm, the kicking of the Evergrande can down the road is allowing risk appetite to rebound.

Attention is now firmly on the Fed, which is set to release it’s statement in addition to new economic forecasts and the dot plot – the path of expected interest rate rises.

The Fed is broadly expected to provide further clues over the timing of its move to taper bond purchases. As a base case scenario, a formal announcement is likely to be made in November for a December start. The risk lies in the Fed not providing enough details on the timetable to taper which could help US equities higher whilst dragging on the US Dollar.

Where next for the S&P500?

The S&P500 is pushing higher after rebounding off the 100 sma on the daily chart overnight. The gains are bringing resistance at 4400 yesterday’s high and 4440 the 50 sma into focus. Failure to hold onto the gains post the Fed announcement could see the 100 sma retested at 4340. A break through the sma could open the door to a deeper selloff to 4300 the weekly low.

SP500 chart

FX – USD eases, CAD extends gains

The US Dollar is holding steady for a second session ahead of the Fed rate announcement later today. Whilst the easing Evergrande situation is bosting risk sentiment, today it’s all about the Fed.

USD/CAD once again outperforming peers thanks to the rise in oil prices and a continues rally following on from the elections on Monday. Canadian voted to stick with the status quo.

USD/CAD -0.2% at 1.2780

GBP/USD  -0.13% at 1.3640

EUR/USD  +0.04% at 1.1730

Oil extends gains on larger stock pile draws

Oil prices are extending gains following a larger than expected draw in inventories amid tight US supply. The latest API crude stockpile data revealed a larger than forecast 6.1 million barrel draw last week. The data comes as supply in the US has been tight following the slow return of production in the Guld of Mexico after several hurricanes.

Between the energy crisis, tight US supply and the rising demand outlook, there are plenty of supportive factors in the oil market right now.

Attention will turn to the EIA official inventory data due later today. Also any movement in the US Dollar following the Fed announcement could also drive movement in dollar denominated oil prices.  

WTI crude trades +1.5% at $71.50

Brent trades +1.3% at $74.71

Looking ahead

15:00 US Existing home sales

15:00 EZ Consumer confidence

15:30 EIA weekly crude oil stock pile data

19:00 Fed rate decision

How to trade with

Follow these easy steps to start trading with today:

  1. Open a account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels.
  4. Place the trade.

More from Indices

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account