Wednesday’s market minute
- Global stocks mingled against a falling US dollar as investors wait for a key Federal Reserve policy statement at 2:00 PM EST.
- The dollar falls to a new two-year low against a basket of its global peers ahead of the Fed’s statement, with traders scared by a collapse in consumer confidence in July and the looming edge of government stimulus.
- Congressional lawmakers remain $ 2 trillion apart in their rival coronavirus rescue plans, just days before the $ 18 billion unemployment benefits expire.
- Six US states posted a record coronavirus deaths on Tuesday, adding to concerns that the resurgence could trigger new business and travel restrictions, as well as school closings, in the coming weeks.
- US equity futures suggest a modestly firmer open on Wall Street ahead of Boeing and General Electric gains before the start of trading.
US stock futures rose higher on Wednesday, as the dollar returned to new two-year lows and bond yields continued to fall, as traders prepared for a busy session highlighted by bluechip’s corporate earnings, a key statement. of the Federal Reserve and stimulus negotiations underway in Washington.
Global stocks were mixed in the overnight session, with gains in Asia offset by a minimum of two and a half weeks for the Nikkei 225 in Japan and bumpy markets in Europe, where the euro is trading at a two-year high against the El Dollar and corporate earnings have been largely disappointing this season.
In the US, where the resurgence of coronavirus infections, which has brought record death rates to at least six states this week, has added to concerns that the recovery in the world’s largest economy is beginning reeling, the dollar is trading at two-year low against a basket of its world peers ahead of today’s Federal Reserve policy statement at 2:00 PM EST.
The dollar, in fact, has fallen 2.6% since the last Fed meeting in June, and has dropped a staggering 8.8% since the central bank began aggressively expanding its balance sheet, which currently stands at $ 7 trillion, late March.
No major changes in interest rate or extraordinary monetary policy are expected from President Jerome Powell, who will speak to the media at 2:30 PM EST, but the Fed is likely to recognize the key risks of the recovery, including a slowdown in hiring, a collapse in consumer confidence in July and the looming abyss of government stimulus, of which $ 18 billion will expire this week in the form of unemployment insurance payments.
With Congress still about $ 2 trillion apart on rival bailout plans, and companies in Texas, Florida and California evaluating reopening plans in the face of high infection rates, risk appetite may be low before the statement. from the Fed though Boeing earnings (licensed in letters) – Get report and General Electric (GE) – Get report before the opening bell could trigger early action on the market.
Contracts linked to the Dow Jones Industrial Average suggest a modest gain of 637 points to start the session, while those linked to the S&P 500, which has gained 3.8% so far this month, suggest an increase of 8 in the opening bell.
Yields on 10-year Treasury bonds held steady at 0.587% in overnight operations, while the dollar index fell 0.2% to 93.50. Gold, which hit a record high of $ 1,980.57 yesterday, dropped to $ 1,958.00 in European transactions.
However, European stocks were modestly firmer, even with the euro raised, as the Stoxx 600 gained 0.1% in early trading and Britain’s FTSE 100 added 0.4%.
Asian stocks also made their way into a positive session, boosted by a 2% gain for the Shanghai Composite that raised the ex-Japan MSCI index across the region to a 0.21% advance in the last hours of trading.
However, Japan’s Nikkei 225 fell 1.15% to a two-and-a-half week low after a series of disappointing bluechip gains, including Nissan Motor Co., which fell 10.4% after forecasting a profit record annual operating and its worst global vehicle. sales in at least a decade.
World oil markets used the fall in the US dollar to boost prices in night trade, as well as data from the American Petroleum Institute, which showed a decrease of 6.8 million barrels in domestic crude oil stocks for the week which ends on July 24. The Department of Energy will release official figures at 10:30 am ET today.
WTI contracts for September delivery, the US benchmark, 34 cents more since its closing in New York on Tuesday and were changing hands at $ 41.38 per barrel in early European operations, while Brent contracts for September , the global benchmark, saw 42 more cents at $ 43.64 a barrel.
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