U.S. equity futures and market forecast
U.S. equity futures rose slightly on Tuesday, as Treasury yields and the dollar remained stable, with investors preparing for a slew of prominent corporate earnings while keeping an eye on the beginning of the Federal Reserve’s two-day policy meeting in Washington.
Stocks ended the previous session moderately higher, with widespread increases from various sectors beyond the major tech giants, as markets transitioned into a busy week on Wall Street that will feature job data, tomorrow’s Fed rate decision, updates from four big tech firms, and Friday’s vital July jobs report.
Earnings are set to be the main focus today, with numerous blue-chip reports anticipated before the opening and highly awaited results from Microsoft and Advanced Micro Devices following the market’s close.
Around 171 companies are scheduled to report this week, marking the busiest period of the season, as analysts predict aggregate second-quarter earnings to increase by 12.1% from the previous year to just above 0 billion.
In the bond market, yields are steady as the Fed commences its two-day policy meeting in Washington, with benchmark 10-year notes trading at 4.174% and 2-year notes at 4.396%.
The U.S. dollar index, on the other hand, was noted to be 0.007% higher against a collection of its global counterparts, trading at 104.569.
Few traders foresee any surprises from the Fed when it releases its statement at 2:00 pm Eastern time tomorrow; however, many anticipate that Chairman Jerome Powell and his team will lead the market toward at least two rate reductions between now and year-end, with the first likely occurring in September.
The Labor Department will initiate a series of job market data releases today with its June Jolts report, a closely monitored count of job openings, resignations, and wage increases that the Fed uses to adjust its inflation forecasts.
Economists predict the report will indicate that slightly more than 8 million jobs were unfilled last month, down from about 8.14 million in May.
As the trading day gets underway on Wall Street, futures tied to the S&P 500 indicate a modest gain of 10 points at the opening bell, while the Dow Jones Industrial Average is expected to open 65 points higher.
The Nasdaq, focusing on technology, is also anticipated to rise by 25 points, even as early declines in Nvidia and Tesla suppress gains.
Global market trends and economic data
In Europe, a better-than-expected report for second-quarter GDP, which showed the world’s largest economic area growing at a rate of 0.3%, provided a lift to regional stocks. However, the gains were mitigated by data showing that Germany, the region’s largest economy, contracted by 0.1% over the three months ending in June.
The Stoxx 600 index across Europe was up 0.3% in early trading, while Britain’s FTSE 100 dipped 0.25% in London, partly due to subdued global commodity prices.
Overnight in Asia, the Bank of Japan commenced its two-day policy meeting in Tokyo, where officials are expected to deliberate a reduction in the central bank’s monthly bond purchases, potentially indicating only its second rate hike in 17 years.
The Nikkei 225 closed 0.15% higher, while the region-wide MSCI ex-Japan index dropped by 0.49%.
Back in Australia, the ASX 200 is predicted to open positively, buoyed by favorable global market sentiments. Investors will closely monitor the upcoming policy meeting of the Reserve Bank of Australia amid expectations of a possible rate increase to tackle inflationary pressures. The Australian dollar remains stable against the U.S. dollar, trading around 0.67 USD, as commodity prices display signs of stabilization.
In the commodities sector, iron ore prices have seen a slight rise, trading at 5 per tonne, driven by renewed demand from Chinese steel mills. Conversely, gold prices have remained stable, hovering around ,950 per ounce, as investors await more clarity on global monetary policies.
The global economic environment remains mixed, with areas of growth offset by ongoing uncertainties. Australian investors are encouraged to stay alert and diversify their portfolios to navigate the unpredictable market conditions.
