U.S. index futures were little changed in pre-market trading on Wednesday, with attention on the minutes from the Federal Reserve’s latest meeting and earnings reports. Investors are eagerly awaiting statements from Fed Chair Jerome Powell, who will speak at the Jackson Hole Economic Symposium on Friday.
At 5:29 AM ET, Dow Jones futures (DOWI:DJI) rose 51 points or 0.12%. S&P 500 futures gained 0.02%, while Nasdaq-100 futures dipped 0.06%. The yield on the 10-year Treasury note stood at 3.816%.
At 2 PM ET, the minutes from the Federal Open Market Committee (FOMC) meeting in July will be released. Investors will focus on how policymakers assessed the U.S. economy and the future direction of interest rates. The FOMC kept the interest rate between 5.25% and 5.50% in July, waiting for more data before making adjustments. The minutes will not include recent jobs and inflation data, which emerged after the meeting.
In the commodities market, oil prices stabilized after significant declines due to rising U.S. crude inventories and easing tensions in the Middle East. Data indicates that crude inventories rose by 347,000 barrels last week, while gasoline and distillate stocks fell. Additionally, visits by mediators to the Middle East, including U.S. Secretary of State Antony Blinken, sparked expectations of a possible ceasefire in Gaza, also contributing to the drop in prices.
West Texas Intermediate crude for October advanced 0.31% to $73.40 per barrel, while Brent for October increased 0.38% to $77.49 per barrel.
Iron ore prices rose for the third day, recovering from last week’s 9% drop, on expectations that China will implement measures to stimulate its struggling real estate market. The commodity advanced in Singapore amid rumors that the government may allow the purchase of unsold properties through special bonds. Iron ore had fallen 30% this year due to economic slowdown and a lack of new construction projects.
Asia-Pacific markets closed mixed on Wednesday, impacted by the end of a winning streak in U.S. indexes. Japan’s Nikkei 225 fell 0.29% to close at 37,951.8, while the Topix lost 0.21% to 2,664.86. Mainland China’s CSI 300 dropped 0.33% to close at 3,321.64. South Korea’s Kospi rose 0.17%, and Australia’s S&P/ASX 200 advanced 0.16%. Hong Kong’s Hang Seng was down 0.82% in the final hour of trading, highlighted by a decline in JD.com shares after Walmart announced the sale of its 9.4% stake in the Chinese company.
In Japan, July exports grew less than expected, raising doubts about the country’s economic recovery. While exports rose 10.3% year-on-year, shipment volumes fell 5.2%, indicating weakness in global demand. The trade balance registered a deficit of $4.28 billion (621.8 billion yen).
According to a Reuters survey, more than half of economists believe the Bank of Japan will raise interest rates by the end of the year, with most expecting the increase in December. They anticipate the BOJ will continue adjusting monetary policy, despite expectations of cuts by other central banks. The forecast is for the rate to rise to 0.50%, a 25 basis point increase.
In Australia, expectations of cuts by other central banks increase pressure on the Reserve Bank of Australia (RBA) to act. The RBA faces pressure to reduce interest rates as data next week is expected to show that government grants lowered overall inflation to the target range of 2-3%. However, underlying inflation remains high.
In China, the China Association of Automobile Manufacturers (CAAM) criticized the European Union’s proposed punitive tariffs of up to 36.3% on Chinese electric vehicles. CAAM states that the tariffs create risks and uncertainties for Chinese investments in the EU and could harm the European automotive industry.
China adjusted its daily reference rate for the yuan, aligning it with market expectations, signaling acceptance of the currency’s current levels following a recovery. This comes after the yuan lost ground against the dollar, which has since retreated. Analysts predict that the PBOC will intervene to prevent excessive yuan appreciation, which could harm exporters and hinder economic recovery.
European markets opened slightly higher on Wednesday, with positive performance in the mining sector, while the telecommunications sector declined.
UK public sector net debt increased to $4.037 billion (£3.1 billion) in July, exceeding forecasts of £2.5 billion, marking a £1.8 billion increase compared to the previous year. In the first four months of the year, debt exceeded expectations by £4.7 billion. Preliminary Purchasing Managers’ Index (PMI) figures for the eurozone are scheduled for Thursday.
In Switzerland, an instant payment system that allows transactions to be completed in seconds was implemented on Tuesday. The new system by the Swiss National Bank and SIX Stock Exchange will cover 95% of retail transactions, with 60% of banks already processing payments within 10 seconds, 24/7. The innovation promises to accelerate processes and create new opportunities for businesses and banks.
Europe’s natural gas reserves were 90% full as of August 19, surpassing the European Union’s target for November 1. This has helped contain a recent price surge. Despite high levels, supply risks remain due to potential interruptions and maintenance in Norway.
U.S. stocks ended slightly lower on Tuesday, reflecting possible profit-taking after recent gains. The Dow Jones fell 0.15%, while the S&P 500 and Nasdaq ended an eight-day winning streak, dropping 0.20% and 0.33%, respectively. Activity was subdued, with investors cautious ahead of the Fed minutes and the Jackson Hole Symposium.
The CME Group’s FedWatch Tool indicated a 73.5% chance of a quarter-point rate cut next month and a 26.5% chance of a half-point cut.
On the earnings front, companies reporting before the market opens include Target (NYSE:TGT), Baidu (NASDAQ:BIDU), OSI Systems (NASDAQ:OSIS), Peloton (NASDAQ:PTON), Advance Auto Parts (NYSE:AAP), BJ’s Wholesale Club (NYSE:BJ), Williams-Sonoma (NYSE:WSM), Canadian Solar (NASDAQ:CSIQ), NetEase Games (NASDAQ:NTES), TD Bank (NYSE:TD), Viking Holdings (NYSE:VIK), among others.
After the close, results are expected from CAVA (NYSE:CAVA), Workday (NASDAQ:WDAY), Bill.com (NYSE:BILL), Intuit (NASDAQ:INTU), Ross Stores (NASDAQ:ROST), Red Robin (NASDAQ:RRGB), Macro Bank (NYSE:BMA), American Software (NASDAQ:AMSWA), and more.