Dow futures +0.25% at 33798
S&P futures +0.28% at 4034
Nasdaq futures +0.33% at 11954
FTSE -0.45% at 7749
Dax -0.2% at 15099
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.
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