U.S. Index Futures Rise as Traders Await Fed, Powell Comments

Matthew Burgess, Bloomberg News

Dec 18, 2018

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(Bloomberg) -- U.S. stock-index futures rose as traders awaited the conclusion of the Federal Reserve’s policy meeting and some signs of progress emerged in the U.S.-China trade spat.

Contracts on the S&P 500 Index expiring in March climbed as much as 0.5 percent after the equity gauge closed little changed on Tuesday. Futures on the Nasdaq 100 Index and Dow Jones Industrial Average gained as much as 0.5 percent each.

Key Insights

  • The Fed is likely to hike rates on Wednesday, even as President Donald Trump intensifies his attacks on the central bank.
  • The U.S. and China are planning to hold meetings in January to negotiate a broader truce in their trade war, according to Treasury Secretary Steven Mnuchin. The two sides have held several phone discussions in recent weeks and were still in the process of planning further formal discussions, he said.
  • Still, investors remain cautious a deal will be done by the March 1 deadline even as China’s openness to cutting tariffs on U.S. cars and buying soybeans is feeding optimism that the dispute will be resolved.
  • “The hiatus on trade helps as well, but I’m a bit more skeptical about how long lasting that is,” Ronald Temple, head of U.S. equity at Lazard Asset Management, told Bloomberg TV.
  • Meantime, FedEx Corp. on Tuesday cut its profit forecast just three months after raising it amid a slowdown in global trade in recent months, with leading indicators pointing to an ongoing deceleration in the near term. The weaker outlook stoked concerns that the global economy is weakening.
  • FedEx’s warning follows Caterpillar Inc., a bellwether of global growth, that was punished by investors in October after repeating its warnings of rising costs due to higher steel prices and U.S. tariffs.

Get More

  • Scary S&P Charts Are Back After FedEx, Micron Awaken Macro Dread
  • FedEx Tumbles With Weaker Outlook Stoking Doubts on Global Trade
  • China and U.S. Planning for Trade Talks in January, Mnuchin Says
  • Charts Take Ominous Turn With S&P 500 February Floor Under Siege

Market Reaction

  • E-mini futures on the S&P 500 expiring in March climb 0.4 percent as of 11:38 a.m. in Tokyo; the index is on track to post its biggest December slide since 1931.
  • Dow and Nasdaq 100 contracts rise 0.3 percent each.

To contact the reporter on this story: Matthew Burgess in Sydney at mburgess46@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Adam Haigh, Cecile Vannucci

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