Article / 14 June 2017 at 7:00 GMT

Morning Markets: Tech stocks turn it around ahead of FOMC

Editor / Saxo Bank
Denmark

Morning Markets


Watchlist

  • UK Labour Market Report 0830 GMT 
  • US Consumer Price Index 1230 GMT
  • US Federal Reserve Announcement, Economic Forecasts (1800 GMT) and press Conference (1830 GMT) 
US tech-sector shares caught a bid Tuesday after a two-session rout that saw them lose 4% of their collective value; Facebook rose 1.51%, Alphabet gained 0.90%, and Amazon added 1.7%.

The tech rebound continued into Asia, although strong IT gains were not enough to keep the Hang Seng, Shanghai Composite, and Nikkei 225 indices from dipping into negative territory. Spreadbetters expect European bourses to push into the green this morning.

The US tech rebound comes, of course, before the Federal Open Market Committee interest-rate decision due today at 1800. 

Investors are maintaining near-certainty about the fact of another rate hike; the ambiguity today resides not in the "will they or won't they," but rather with the Fed's economic projections where markets are looking to gauge how sanguine the central bank remains in the face of several softer-than-expected data releases recently.

US May CPI data are due at 1230 GMT along with advance monthly sales for retail and food services; the Energy Information Administration's weekly petroleum status report at 1430 GMT, and European Union industrial production this morning at 0900 GMT.

Market signals

Asian session

  • Asian markets opened mostly higher ahead of China data and after the US rebound
  • Investors await today's Federal Reserve interest rate decision and policy outlook
  • The Fed is expected to raise its benchmark interest rate for the second time this year
  • Westpac-Melbourne Institute shows Australian consumer sentiment fell 1.8% in June
  • Australian miners were hit by a 2.8% fall in iron ore overnight to a 12-month low
  • Oil resumed its fall after a surprise buildup of US stocks
  • China's retail sales rose 10.7% year on year in May, matching the consensus estimate
  • China's industrial production grew at 6.5% year on year versus 6.4% expected

Forex ahead

  • The US dollar held declines ahead of the US Fed rates announcement
  • The yen was steady at 110.08/dollar after falling 0.1%
  • The Canadian dollar continued to trade at around three-month highs
  • The kiwi fell 0.2% to 0.7206 to the US dollar on a widening current account deficit

From the Floor

Staying the course.The reason one might look for hawkishness is that Yellen is in legacy mode,” says Hardy.

Fed focus.I think everything will focus on the inflation outlook,” says Garnry 

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

1..2..3
Along with the Fed's interest rate decision, keep your eye on the update for growth estimates, writes James Picerno. The central bank will probably maintain the 2% trend for economic activity. 

Parity possible?
The conventional wisdom is that EURUSD will rally if the US versus Germany 10-year bond spread narrows, but what if this is turned on its head, asks Max McKegg.

Fed-watching
Asian markets are digesting the China data and awaiting the US Federal Reserve's policy decision, writes the Saxo APAC Sales Trading team.

Federal Reserve

Will the Fed remain hawkish despite softening US data? Photo: Shutterstock

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