U.S. Index Futures Trade Sideways Amid Anticipation of Fed’s Policy Update; Oil Prices Dip

In Wednesday’s pre-market trading, U.S. index futures were trading sideways, reflecting investors’ caution after a positive session, with focus turning to the upcoming Federal Reserve monetary policy update.

As of 6:31 AM, Dow Jones futures (DOWI:DJI) were down 31 points, or -0.08%. S&P 500 futures declined by -0.06%, and Nasdaq-100 futures gained 0.03%. The yield on 10-year Treasury notes stood at 4.279%.

In the commodities market, West Texas Intermediate crude for April fell 0.85% to $82.76 per barrel. Brent crude for May dropped 0.65%, to around $86.81 per barrel. Iron ore traded on the Dalian exchange rose 1.23%, to $114.38 per metric ton.

On Wednesday’s economic agenda, investors await the release of the weekly oil inventories by the EIA at 10:30 AM. Subsequently, at 2:00 PM, all eyes will turn to the FOMC, which will announce its interest rate decision, with the consensus from LSEG anticipating the range to be maintained between 5.25% and 5.5%. This moment is crucial for the financial markets as it directly affects investment strategies and economic expectations. Immediately after, at 2:30 PM, the press conference led by the Fed Chair will be meticulously analyzed by investors and analysts, seeking insights into the future directions of monetary policy and its influence on the global economy.

In the Asia-Pacific stock markets, the majority closed higher, driven by the decision of the Chinese Central Bank to keep its main interest rates stable. The stability of Chinese rates follows a previous cut in the longer-term rate, keeping the focus on global monetary policy. The Shanghai SE in China rose 0.55%, the Nikkei in Japan increased 0.66%, and the Kospi in South Korea advanced 1.28%, while the ASX 200 in Australia slightly retreated by 0.10%.

In the European markets, luxury sector icons such as LVMH, Christian Dior, and Hermes faced declines above 2%, with Burberry experiencing a sharp fall of 4.7%. This downward trend was catalyzed by a warning from Kering, a prestigious Paris-based luxury conglomerate, about a pullback in sales in Asia, resulting in a significant 14% loss in its share value right after the market opened. Concurrently, inflation in the UK proved softer than anticipated, reaching 3.4% annually in February, according to official data released on Wednesday, marking a decrease compared to the 4% recorded in January.

On Tuesday, the U.S. stocks, initially under pressure, surprisingly reversed, with the Dow Jones, S&P 500, and Nasdaq closing up 0.83%, 0.56%, and 0.39%, respectively. Nvidia (NASDAQ:NVDA) rose 1.1% after announcing new AI chips, reflecting the company’s influence on the market. Meanwhile, anticipation around the Federal Reserve’s decisions and an increase in housing starts were also key points.

For quarterly earnings, scheduled to present financial reports before the market opens are Pinduoduo (NASDAQ:PDD), General Mills (NYSE:GIS), Jinko Solar (NYSE:JKS), BioNTech (NASDAQ:BNTX), Ollie’s Bargain Outlet Holdings (NASDAQ:OLLI), Signet Jewelers (NYSE:SIG), Orla Mining (AMEX:ORLA), Kingsoft Cloud (NASDAQ:KC), Sportrader Group AG (NASDAQ:SRAD), among others.

After the close, earnings from Micron Technology (NASDAQ:MU), Chewy (NYSE:CHWY), Five Below (NASDAQ:FIVE), KB Homes (NYSE:KBH), Guess (NYSE:GES), HeartBeam, Steelcase Inc (NYSE:SCS), Lithium Americas Argentina (NYSE:LAAC), Worthington Enterprises (NYSE:WOR), Alvotech SA (NASDAQ:ALVO), and more will be awaited.