Forex
U.S. stock index futures point to positive start to trading
Everyone understands US stock futures are explained. U.S. stock index futures and options are aiming for a positive start to the week of July 25 (ESU00: +0.33%), in anticipation of this week’s Fed policy meeting and earnings reports from some major companies that will help gauge the impact of a strengthening dollar and rising inflation.
U.S. stock index futures analysis
There will be plenty of catalysts this week, including reports from about 175 S&P500 companies, which make up nearly 50% of the index’s market capitalization; the FOMC decision on Wednesday; the preliminary Q2 GDP estimate, and the June personal income and spending statistics on Friday. Also, the Senate is expected to hold a final vote tomorrow on the CHIPS act semiconductor manufacturing bill.
Today, Philips (PHG) and Squarespace (SQSP) are among several companies that made moves down in the preliminary market after the earnings reports were released. The former reported better-than-expected earnings, but was downgraded by Societe Generale to “hold” from “buy.” The second company reported better-than-expected earnings, but posted a lower-than-consensus outlook for Q3 and FY22.
Several companies that recently reported a quarter below expectations blamed the strong U.S. dollar. Goldman Sachs calculations show that a 10% increase in the dollar, weighted by trading prices, has a 2-3% impact on earnings per share. The bank believes that many more companies will report weaker-than-expected earnings in Q2. Looking ahead, Goldman believes that U.S. stocks exposed to Europe will continue to underperform, and the outlook for Chinese-exposed stocks remains challenging.
Morgan Stanley once again reiterated its bearish stance on U.S. equities in the reporting season. The bank highlighted the breadth of downward revisions, particularly noticeable in sectors such as consumer staples, financials, industrials, materials, semiconductors, technology equipment and telecom services.
Morgan Stanley continues to urge investors to increase their stake in defensive growth rather than offensive growth, cautioning against trying to put a Fed pause on prices because, in its view, this cycle is not like previous ones.
Oil prices are rising before the open in wave trading, amid a balance of supply concerns and expectations that a U.S. interest-rate hike will dampen fuel demand. September WTI crude oil futures are at $96.36 a barrel (+1.75%).
Gold futures are fluctuating in a narrow range after breaking a streak of five weekly declines. August gold futures are near $1,722 an ounce (-0.30%).
The dollar weakened against major world currencies with the return of risk appetite in foreign exchange markets. The dollar rose initially, following a cautious Asian session in which investors were concerned about global growth prospects. The euro rose 0.26% to $1.0243 after the release of the German Ifo index.
U.S. stock index futures are rising Thursday, trading data showed. Markets are assessing the outcome of the U.S. Federal Reserve (Fed) meeting.
The Dow Jones Industrial Average (DJIA) futures rose 0.22% to 32,329 points, the NASDAQ high-tech index rose 0.96% to 12,828.5 points and the S&P 500 broad market index rose 0.48% to 3,989.75 points.
The Fed on Wednesday expectedly raised its benchmark rate by 25 basis points to 4.75-5% per year. The regulator noted that it does not expect the rate reduction this year, but allows it next year. U.S. exchanges were down 1.6% in Wednesday trading.
According to the CME Group, 55.8% of analysts now expect the Fed’s discount rate to remain unchanged in May, while 44.2% expect it to rise another 25 basis points. Thus, markets concede that the Fed may interrupt the cycle of hikes that began last March.
At the same time, shares of cryptocurrency exchange Coinbase were down 10.6% in pre-bid trading. The exchange this week received notice from U.S. authorities of an impending charge of violating laws.
Later in the trading, statistics on initial jobless claims in the U.S. for the week through March 18 will be released. Analysts forecast that the figure would increase by 5 thousand to 197 thousand applications.
Earlier we reported that the US budget deficit was $262bn in February.
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According to a report from the U.S. Treasury Department, the U.S. budget deficit in February was $262,434 billion compared to a $38.8 billion deficit in January. The Dow 30 also had problems.
Analysts at DailyFX suggested that the nation’s budget deficit for February was expected to be $256 billion. A year earlier, in February, the U.S. posted a budget deficit of $216,590 billion.
According to the GAO report, U.S. government spending rose 3.5 percent year over year last month to $524.548 billion, while revenue, in contrast, declined 9.5 percent to $262,114 billion.
Earlier, the U.S. edition of the Washington Post published an editorial stating that the new draft budget proposed by the Biden administration undermines U.S. national security and its ability to invest in the future, because it suggests a further growth of the U.S. national debt.
The WP editorial board noted that the new draft budget assumes a $2 trillion budget deficit, including due to the high cost of providing health insurance to the elderly of the baby boomer generation.
Earlier we reported that the EU has agreed to reduce energy consumption by 11.7% by 2030.
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