(Bloomberg) — U.S. equity futures posted small gains as a watchful tone spread across global markets ahead of the Federal Reserve’s interest-rate decision.
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Traders are split on whether the U.S. Federal Reserve will cut rates by 25 or 50 basis points later Wednesday, with market-referenced odds currently on a bigger cut of 50%. The Fed will also release new quarterly forecasts, and Chair Jerome Powell will hold a press conference.
S&P 500 and Nasdaq 100 contracts rose about 0.2%. Europe’s Stoxx 600 index was flat, as was a gauge of Asian shares.
The Japanese yen rose as much as 0.8%, signaling expectations of a narrowing difference in policy between the central bank and the Bank of Japan, which decide rates on Friday. The dollar and Treasuries were little changed.
“A 25- or 50-basis-point cut has more questions than answers,” said Vishnu Varadhan, head of economics and strategy at Mizuho Bank in Singapore. “With the Fed expected, it looks like a cautious day on the bench.”
Economists expect the Federal Open Market Committee to cut rates by a quarter point to a range of 5% to 5.25%, though many expect a half-point move. Investors see the odds of even a half-point adjustment.
New quarterly projections in the form of a “dot plot” released at the end of the central bank’s two-day meeting will provide further insight into borrowing costs and the economy’s path forward.
In the UK, money markets saw modestly less easing after Bank of England services inflation rose to 5.6% in August from 5.2% in July, while the headline figure was slightly above the 2% target. The pound strengthened after Wednesday’s data.
Chinese stocks listed on the main markets rose modestly after the holiday break, paring gains in Hong Kong shares amid calls for major economic stimulus.
Chinese chip-related stocks rose after the country said it had made progress in the development of domestic chip-making equipment. Shanghai Zhongjiang Hi-Tech Park Development rose by a daily margin of 10%, while Changchun UP Optotech and Tsai Microelectronics also rallied.
Oil fell after two days of gains as traders weighed signs of higher U.S. inventories, rising tensions in the Middle East and the prospect of a rate hike by the Federal Reserve. Crude oil rose on Tuesday after Hezbollah responded to an Israeli attack involving pagers in Lebanon that left thousands injured.
Highlights of this week:
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Eurozone CBI, Wednesday
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Central Bank rate decision, Wednesday
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UK price decision, Thursday
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US US conf. Board leading index, initial jobless claims, US existing home sales, Thursday
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FedEx earnings, Thursday
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Japan price decision, Friday
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Eurozone consumer confidence, Friday
Some key movements in the markets:
Shares
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The Stoxx Europe 600 was little changed as of 8:13 a.m. London time
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S&P 500 futures rose 0.2%
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Nasdaq 100 futures rose 0.2%
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Futures for the Dow Jones industrial average rose 0.1%
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The MSCI Asia Pacific Index was little changed
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The MSCI emerging market index fell 0.1%
Coins
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The Bloomberg Dollar Spot Index fell 0.1%
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The euro was little changed at $1.1121
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The Japanese yen rose 0.5% to 141.70 per dollar
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The offshore yuan was up 0.2% at 7.0973 per dollar
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The British pound was up 0.2% at $1.3189
Cryptocurrencies
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Bitcoin rose 0.6% to $60,498.69
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Ether fell 0.5% to $2,332.49
Bonds
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The yield on 10-year Treasuries was little changed at 3.65%.
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Germany’s 10-year yield was little changed at 2.15%
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Britain’s 10-year yield rose one basis point to 3.78%
materials
This story was produced with the help of Bloomberg Automation.
–With assistance from Rob Verdonck and James Hirai.
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