US pre-open: Futures in the green ahead of FOMC meeting outcome
By Iain Gilbert
Date: Wednesday 22 Sep 2021
(Sharecast News) - Wall Street futures were pointing to a positive open ahead of the bell on Wednesday as market participants await this evening's Federal Reserve interest rate decision with bated breath.
As of 1240 BST, Dow Jones futures were up 0.56%, while S&P 500 and Nasdaq-100 futures were 0.51% and 0.27% higher, respectively.
The Dow closed 50.63 points lower on Tuesday as major indices' attempt at rebounding from the prior session's heavy sell-off fell short.
Wednesday's primary focus will be embattled Hong Kong-listed property developer Evergrande, which is at risk of a possible default if the firm can't get together the millions of dollars for debt payments on its US dollar-denominated bonds before the end of the week, with investors fearful of a step down in global economic growth if China decelerates its property market too much or allows the real estate giant to fail.
However, sentiment got a slight boost overnight following word that Evergrande would be able to cover its interest payments on time thanks to a mainland-traded bond denominated in Chinese yuan.
Also in focus, the outcome of the Federal Reserve's two-day policy meeting, with the central bank likely to prepare market participants for the removal of monetary stimulus as chairman Jerome Powell has previously indicated that tapering of the Fed's $120.0bn bond-buying programme could begin before the end of 2021.
AvaTrade's Naeem Aslam said: "Futures in the United States and Europe are trading higher today, as investors focus on China's Evergrande whirlwind, which has even overshadowed the Federal Reserve's meeting, which is set to conclude today. Investors are concerned about the crisis spreading to global markets after reports surfaced that the real estate powerhouse is on the verge of collapse.
"Today, investors should examine the Fed's policy statement, as well as its interest rate and economic forecasts, to determine how the central bank sees the economy performing in the short term. The two main areas of concern continue to be the state of the labor market and the outlook for inflation in coming months. Most importantly, any communication regarding the eventual tapering of bond purchases will be valuable. Although the Fed is unlikely to provide an exact timeline for tapering, investors can anticipate some insight into the framework that officials are considering."
On the macro front, mortgage applications in the week ended 17 September increased 4.9%, according to the Mortgage Bankers Association, up from a 0.3% increase in the previous week, principally due to a surge in refinancing activity, although purchases did also creep higher as well.
Still to come, existing home sales data for August will be published at 1500 BST and the FOMC's interest rate decision and economic projections were slated for release at 1900 BST, ahead of the central bank's press conference at 1930 BST.
In the corporate space, General Mills beat on quarterly sales estimates, while Blackberry will publish its latest results after the close.
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