Thursday September 27th

27-09-2018

US stock futures rise after Fed hikes rates, but political turmoil adds unease

U.S. stock-index futures fluctuated ahead of Thursday's open as investors digested the latest monetary-policy decision by the Federal Reserve. Around 7:10 a.m. ET, Dow Jones Industrial Average futures rose 7 points, indicating a gain of 17.72 points. S&P 500 and Nasdaq 100 futures also pointed to slight gains at the open. The moves in U.S. futures come after Wall Street closed Wednesday's session lower, after the Federal Open Market Committee (FOMC) concluded its September policy meeting. The Fed hiked its benchmark interest rate by a quarter point and announced that an additional hike was projected by year-end, and that three more were penciled-in for 2019. Markets came under pressure, with U.S. bond yields dropping, after Chair Jerome Powell told reporters that he didn't see inflation surprising to the upside. Meanwhile, trade tensions between the U.S. and China continue to escalate. On Wednesday, President Donald Trump accused China of intending to interfere in November's congressional elections. He added, without providing evidence, that Beijing didn't want the Republican party to perform well. This prompted an immediate rejection from the Chinese government, which said it didn't intrude on another country's domestic matters, Reuters reported. Elsewhere, Trump criticized Canada for the slow pace of discussions concerning the overhaul of NAFTA. The president said he had recently vetoed Prime Minister Justin Trudeau's invitation for a one-on-one meeting — a claim that prompted a spokesman of Trudeau's government to state that no such meeting had been requested. Trump did agree, however, to start trade talks with Japan. In politics, Supreme Court nominee Brett Kavanaugh is due to appear at a Senate Judiciary Committee hearing Thursday, amid multiple accusations of sexual misconduct. Kavanaugh has denied the allegations. In the latest economic data, jobless claims rose less than expected in the latest week, though they remain near multidecade lows. Orders for durable goods rose 4.5%, faster than had been expected. U.S. real gross domestic product for the second quarter rose at a 4.2% annualized rate, unchanged from the earlier estimate, the Commerce Department said. A reading on August pending-home sales will come out at 10 a.m. ET. Asia markets were largely negative on Thursday, on the back of U.S. Federal Reserve Chairman Jerome Powell's comments on inflation after the central bank decided to increase interest rates. The Nikkei 225 in Japan ended the trading day lower by 0.99 percent at 23,796.74, with most sectors closing lower. In the Greater China region, Hong Kong's Hang Seng index was lower by 0.3 percent as of 3:15 p.m. The Shanghai composite fell by 0.54 percent to close at 2,791.78 while the Shenzhen composite slid by 1.26 percent to 1,429.61. In South Korea, the Kospi bucked the overall trend to close higher by 0.7 percent at 2,355.43. Oil prices rose by nearly 1 percent on Thursday, driven by the prospect of a shortfall in global supply once U.S. sanctions against major crude exporter Iran come into force in just five weeks' time. U.S. President Donald Trump this week demanded that OPEC raise production to prevent further price rises ahead of key congressional elections in early November. Analysts say the Organization of the Petroleum Exporting Countries and partner Russia appear unlikely at this point to respond immediately to Trump's demands, while U.S energy secretary Rick Perry has also ruled out using U.S. strategic crude reserves as a means of lowering the price. The most-active December Brent crude futures contract was up 59 cents at $81.38 a barrel at 0921 GMT, just off Tuesday's four-year high of $82.55. The front-month November contract expires on Friday. U.S futures were up 36 cents at $71.93 a barrel. Gold prices edged higher on Thursday as investors largely discounted a U.S. interest rate hike, but gains were limited as the dollar rose following reports of a row in Italy's new government. Spot gold was up 0.1 percent at $1,195.61 an ounce as of 0815 GMT. On Wednesday, the metal touched its lowest since Sept. 11 at $1,190.13 an ounce. Spot gold prices have closed in a range between $1,210 and $1,190 an ounce since Aug. 28. U.S. gold futures were up 0.1 percent at $1,199.90 an ounce.