US futures
Dow futures -0.1%, S&P futures 0.08% & Nasdaq futures 0.20%
In Europe
FTSE -0.47% & DAX -0.73%
- US at record levels on Fed rate cut optimism
- Nasdaq rises for a 6th straight session
- US retail sales jump 0.6% MoM
- Oil rises on supply concerns
Stocks at record levels
US stocks are broadly unchanged on Tuesday at record levels as investors digest stronger-than-expected retail sales data ahead of the start of the Federal Reserve meeting, with a policy decision due tomorrow.
Yesterday, the S&P 500 and the NASDAQ reached all-time closing highs, with recent gains being driven by Fed rate cut expectations. The markets are fully pricing in the rate cuts by the FOMC, and we'll be looking at projections on the dot plot for signs that the Fed could continue to cut rates further in the coming meetings.
The market is pricing in three rate cuts this year, whilst the Federal Reserve's previous dot plot pointed to two cuts. The market will be watching to see whether the Fed lifts its median expectations 2 three rate cuts before the end of the year
US retail sales jumped 0.6% month on month in August, well above the 0.2% growth forecast, indicating that the US consumer remains resilient. At the same time, the import price index rose 0.3% in August, well above the 0.2% fall forecast, suggesting that there is a growing risk of a tariff-driven increase in inflation.
Separately, ongoing China-U.S. trade talks are taking place in Madrid, which, according to Trump, have been going very well.
Corporate news
Oracle is rising over 5% on reports that the cloud computer giant is among a consortium of firms that would enable TikTok to continue operations in the US if a US-China framework deal were agreed.
Ford is rising 0.2% after announcing plans to cut 1000 jobs in its EV production in Cologne, Germany, due to weak demand.
Alphabet is rising after Google said it would invest £5 billion into the UK ahead of President Trump's state visit.
Nasdaq 100 forecast – technical analysis
The Nasdaq extends its ascent, rising for a ninth straight session, hitting a record high of 24,385. The RSI supports further upside while it remains out of overbought territory. 24,500 and 25,000 are the next logial targets. Support can be seen at 24,000, the August high, and below here at 23,500.
FX markets – US falls, GBP/USD rises
The USD is falling as the FOMC two-day meeting begins and investors brush off stronger-than-forecast US retail sales data.
The EUR/USD is rising amid a weaker USD and following stronger-than-forecast German ZEW economic sentiment data. The ZEW gauge showed that investor morale unexpectedly rose in September to 37.3, up from 34.7 in August, defying expectations of a fall to 27.3. However, the current situation gauge fell as significant risks remain amid uncertainty over US tariffs and Germany’s autumn of reforms.
The GBP/USD is rising after the latest jobs data showed that unemployment remained unchanged at an almost 4-year high of 4.7%. However, wage growth also remained strong at 4.7%, well above the 3% considered to be consistent with inflation at the BoE’s target level. The data support the view that the BoE will leave rates unchanged at 4% at its meeting this week.
Oil rises supported by supply concerns
Oil is rising for a second straight session, as the markets weigh potential supply disruption from Russia following Ukraine drone attacks on its refineries, and the prospect of a rate cut from the Federal Reserve.
Ukraine has ramped up attacks on Russia's energy infrastructure as any hopes of peace talks have faded. Attacks on export terminals are a strategic move to limit Russia's ability to sell its oil abroad. Goldman Sachs estimates that Ukrainian attacks have removed around 300,000 barrels per day of Russian refining capacity over the past six weeks.
Oil markets are also watching the Federal Reserve meeting, which kicks off today, where the bank is widely expected to announce a rate cut tomorrow. No borrowing costs typically boost fuel demand, but there is some caution regarding the health of the US economy
