Dow futures +0.7% at 33520
S&P futures +0.97% at 4280
Nasdaq futures +0.97% at 144800
FTSE +1.37% at 7440
Dax +0.50% at 15135
- The Fed left rates unchanged
- Signaled that higher yields have removed some of the impetus for further hikes
- Jobless claims rise to a 7-week high
- Apple report after the close
Fed hints that it is done with hikes
U.S. U.S. stocks point to a strong open, extending gains from the previous session as investors continue to digest the Federal Reserve's interest rate decision, jobless claims data and look ahead to Apple’s earnings.
While the Fed left rates unchanged at 5.25 to 5.5%, Federal Reserve chair Jerome Powell signaled that high yields creating tighter financial conditions have removed the impetus for further rate hikes. Despite the Fed also saying that rates will need to remain high for longer, the market has interpreted this as a dovish meeting suggesting that the Fed could be at the end of its hiking cycle.
Meanwhile, jobs data is back in focus, with US jobless claims coming in marginally above forecasts at 217k, up from 210k the previous week and a 7-week high – a sign that the US labour market might be starting to cool.
The data comes after ADP figures were softer than expected at 113k, but job vacancies rose more than expected. The data paints a mixed picture ahead of tomorrow’s non-farm payroll.
Apple is in focus and is rising ahead of its fourth-quarter results after the close. Expectations are for revenue to fall for a sixth straight quarter, dropping by 1% to $89.27 billion, and EPS is expected to rise to $1.39 up from $1.29. Attention will be on iPhone sales, which are expected to rise 2.3%, and service growth will also be in focus. The question is, will this be sufficient to offset weakness in wearables, the Mac and the iPad. China sales will be under the spotlight after headwinds across the quarter.
Peloton slumped 5.4% after the fitness company forecast weaker-than-expected Q2 revenue amid falling demand for its exercise equipment
Starbucks has jumped and is set to start up over 6% on the open after the coffee chain beat Q4 forecasts amid strong demand for its products in North America, which offset weakness in China.
Nasdaq 100 forecast – technical analysis.
The Nasdaq extends the recovery from the 200 sma, pushing above resistance at 14500 and the 20sma at 14775. Beyond here, buyers will look to retake the 50 sma at 15000 and target 15300 at the October high. Meanwhile, a fallback below the 20 sma could see sellers test support at 14500 the August low to expose the 200 sma again.
FX markets –USD falls, EUR rises
The USD falling tracking treasury yields lower after the Federal Reserve interest rate decision. The market has interpreted the Federal Reserve's comments as more dovish, keeping pressure on the greenback.
EUR/USD is rising, capitalizing on a weaker U.S. dollar despite weak manufacturing data. The manufacturing PMI fell to a month low of 43.8 in October, down from 43.4 in September, and points to a further deterioration in the health of the eurozone's manufacturing sector. Factory orders have reached historically low levels, indicating our notable weak demand. The data adds to mounting evidence that the eurozone could be heading for a recession in the final two quarters of this year.
GBP/USD is Rising after the Bank of England left interest rates unchanged at a 15-year high of 5.25% for a second straight month. The BoE has said that it is too early to talk about rate cuts, and given the rise in the pound, the market may be considering whether rates will stay higher for longer in the UK compared to the US, where inflation has cooled more quickly than the UK.
EUR/USD -0.41% at 1.0536
GBP/USD -0.27% at 1.2118
Risk appetite boosts oil
Oil prices rise as risk appetite rebounds, lifting demand for riskier assets, after the Federal Reserve kept interest rates on hold and hinted that it could be done with rate hikes.
This not only is helping the demand outlook for the world’s largest oil consumer, but it is also putting the USD under pressure, making oil cheaper for buyers with foreign currencies.
However, gains are being capped by weak manufacturing PMI data from the eurozone today and China earlier in the week.
Oil makers will continue watching developments in the Middle East. Oil prices are down over 4.5% this week, indicating that the geopolitical risk premium on oil has continued to fall. This remains a very fluid situation and could quickly lift the price of oil should the conflict start to broaden out. However, for now, that doesn’t appear to be the case.
WTI crude trades +1.25% at $81.37
Brent trades +1.3% at $85.60
14:00 US factory orders