Wednesday March 16th


Futures edge lower after data

U.S. stock index futures pointed to a lower open on Wednesday amid data reports ahead of the conclusion of the latest Federal Open Market Committee (FOMC) meeting. Housing starts rose 5.2 percent in February. The consumer price index showed a 0.2 percent decline. Ex food and energy, the so-called core CPI rose 0.3 percent in February for a 2.3 percent rise over the 12 months through February, Reuters said. Treasury yields rose, with the 2-year yield near 1 percent for its highest since Jan. 8. The U.S. dollar index held higher, with the euro near $1.108 and the yen at 113.65 yen against the greenback as of 8:38 a.m. ET. Industrial production data for February is due at 9:15 a.m. The FOMC is due to conclude its two-day meeting on Wednesday with the 2 p.m. ET release of its statement and economic projections. Those include the highly scrutinized "dot plot," which shows the targets for appropriate federal funds rates by FOMC participants. Fed Chair Janet Yellen is also scheduled to give a news conference at 2:30 p.m. While policy is widely anticipated to remain unchanged, with the Fed Funds Rate left at 0.25 to 0.50 percent, the Fed's updated economic forecasts and Yellen's post-meeting press conference will be scrutinized for insight into the near-term policy outlook. "Given the likely downward revision to the Fed's GDP growth forecast in the current year (from 2.5 percent), the dot plots of FOMC member views will also likely signal a slower pace of further hikes over the remainder of the year, with the median expectation of the Fed Funds Rate at end-2016 likely to be pushed lower by 25 or 50 basis points from the range of 1.25-1.50 percent signaled at December's meeting," said economist at Daiwa Capital Markets, Emily Nicol. FedEx is scheduled to report earnings after the close Wednesday and will be scrutinized for insight into global economic activity. Williams-Sonoma will also report after the bell. European equities edged higher on Wednesday as markets await the latest interest rate decision from the U.S. Federal Reserve's monetary policy committee. In the U.K., Chancellor George Osborne reports his annual borrowing and spending plans to the U.K. parliament in an exercise known as the "budget". Osborne is expected to announce further cuts to public spending in his speech to MPs. Asia markets closed mixed Wednesday, following a weaker finish on Wall Street overnight as traders await the U.S. Federal Reserve decision due later. Japan's benchmark Nikkei 225 shed 0.83 percent, or 142.62 points, to 16,974.45 by Wednesday's close, extending Tuesday's 0.68 percent fall. Across the Korean Strait, the Kospi closed up 0.25 percent, or 4.93 points at 1,974.9. Hong Kong's Hang Seng index closed down 0.15 percent, or 31.07 points, at 20,257.7. Chinese markets were also mixed, with the Shanghai composite closing up 0.21 percent, or 6.11 points, at 2,870.48 and the Shenzhen composite closing down 1.02 percent, or 17.61 points, at 1,711.47. Oil prices firmed on Wednesday on an announcement that producers will meet next month in Qatar to discuss a proposal to freeze output and on growing signs of a decline in U.S. crude production. Producers both from and outside the Organization of the Petroleum Exporting Countries will hold talks in the capital Doha on April 17, Qatari oil minister Mohammed Bin Saleh Al-Sada said. Around 15 OPEC and non-OPEC producers, accounting for about 73 percent of global oil output, support the initiative, the minister said in a statement. Brent crude futures were up 66 cents at $39.39 a barrel. U.S. crude futures were trading 58 cents a barrel higher at $36.92. Gold fell on Wednesday as investors awaited the outcome of the Federal Reserve's latest policy meeting, which they hope will offer clues on the pace of U.S. interest rate hikes this year. Spot gold was at $1,228.63 an ounce, lower from late on Tuesday, while U.S. gold futures for April delivery were down $1.10 an ounce at $1,230. "(Today) is all about the Fed," Ava Trade analyst Naeem Aslam said. "We are anticipating a very hawkish message from them." Gold is highly sensitive to the prospect of rising rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. "What we are focused on right now is the feared trajectory of the dollar, which looks very bullish," Aslam said. "This is not such good news for gold."