US open: Wall Street pauses for breath with Fed in focus

US futures

Dow futures +0.09% at 35944

S&P futures +0.03% at 4615

Nasdaq futures -0.13% at 15890

In Europe

FTSE -0.72% at 7241

Dax +0.42% at 15889

Euro Stoxx +0.07% at 4284

Economic focus returns with FOMC starting

US stocks are pointing to a relatively quiet start, in cautious trade, as investors take a breath from the recent earnings driven rally and  look ahead to the Federal Reserve monetary policy meeting.

The two-day meeting kicks off today with the Fed widely expected to announce the scaling back of its bond buying programme in a bid to ease inflation. Given that the tapering of monthly bond purchases is broadly anticipated. Investors will be watching what the Fed is saying about inflation and the timing surrounding the first interest rate rise.

Earnings from with names such as Pfizer, T-Mobile, ConocoPhillips, Lyft and Under Armour are also due.  So far earnings season has been a positive for stocks, calming investor concerns over surging inflationary pressures. However, today and tomorrow could see the macro economic picture back in focus.

Tesla drop pre-market

Tesla shares will be under the spotlight after Musk tweeted that the Hertz deal hasn’t been signed yet. Hertz had announced that it had ordered 100,000 Tesla cars which sent Tesla’s share price 13% higher on the day of the announcement whilst boosting the market capitalization to $1 trillion. Needless to say, the stock is trading lower pre-market.

Where next for S&P 500?

The S&P500 is extending its rebound from the October low of 4270, pushing to fresh all-time highs. The RSI is edging towards overbought territory so there could be some consolidation or an ease back soon. Bulls will look to break above 4626 to reach fresh all-time highs. It would take a move below 4550 to negate the bullish up trend.

FX – USD edges high, GBP hit by Brexit

The US Dollar is ticking a few pips higher as the FOMC meeting kicks off. The Fed are broadly expected to announce the start of the tapering of its bond purchases.

GBP/USD is underperforming amid rising Brexit tensions and ahead of the BoE interest rate announcement on Thursday.  French-British relations have deteriorated over post Brexit fishing rights. Although France has backed down over applying sanctions.

GBP/USD -0.22% at 1.3632

EUR/USD -0.1% at 1.1595

Oil looks to API data as supply remains tight

Oil prices are easing lower after three straight days of gains. Oil prices remain well supported around multi-year highs on strong demand and tight supply.

The OPEC+ group announced that they undershot expected pace of output increases last month. The group pumped 27.5 million barrels a day, up 190,000, but below the 254,000-increase permitted.

Investors are likely to wait for today’s API data and tomorrow’s EIA numbers before taking a decision.

WTI crude trades -0.48% at $82.93

Brent trades -0.27% at $84.25

Looking ahead

20:30 API crude stockpile change

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