9th Apr 2014 12:16
LONDON (Alliance News) - US stock look set to open tentatively higher Wednesday, with little in the way of data to provide a significant boost ahead of the release of the minutes of the latest US Federal Reserve policy meeting still ahead Wednesday.
The futures markets are indicating that the DJIA, S&P 500, and Nasdaq Composite all will open between flat to 0.1% higher.
The best performers in the US markets on Tuesday were those that had underperformed so spectacularly at the start of the week amid concerns that the multiples on which they trade are far too high. These included the big technology stocks such as eBay, Netflix, Amazon, and Google. "Whenever there is a big sell-off, it?s quite typical for those sold off most to have the biggest bounce in the days following," says CMC Markets analyst Jasper Lawler.
US MBA mortgage applications for the week ended April 4 showed a 1.6% drop over the week. Wholesale inventories data for February are still to come at 1400 GMT. However the clear market focus in an otherwise light data calendar is the release of the minutes from the latest Federal Reserve policy meeting, due at 1800 GMT.
At the press conference that followed the March 18-19 meeting new Chair Janet Yellen struck a hawkish tone by suggesting that the first interest rate rise could be as soon as six months after the tapering of asset purchases has run its course. This caught markets off guard, sending equities lower and the dollar higher.
However, in more recent appearances, both Yellen and other Fed officials have been careful to strike a more dovish tone. "The minutes are not likely to be as hawkish as the market?s initial reaction suggested," says Brown Brothers Harrimen global head of currency strategy Marc Chandler.
The US banks are in focus this week, with JP Morgan and Wells Fargo due to report earnings on Friday. Ahead of that, the Federal Reserve announced last night it is increasing the leverage ratio for US banks to 5%.
There's not too much for the markets to take direction from Wednesday afternoon, although there are results due in the US corporate calendar from Bed Bath & Beyond. CMC's Lawler suggests that the 0.3% jump in US retail sales recorded in February bodes well for the home retailer.
The expected higher start on Wall Street would follow a positive morning in Europe, with the French CAC 40 holding on to morning gains, up 0.5%, and the German DAX up 0.3%.
Within UK equities, the FTSE 100 is the best performing major European index Wednesday, up 0.7% at 6,639.32. The FTSE 250 is up 0.9% at 16,158.77, while the AIM All-Share is up 0.7% at 847.18.
Almost every sector within UK equities is higher by early afternoon Friday, with those notable exceptions being weighed down by industry data. The motor insurers continue to be amongst the heaviest fallers after the confused.com and Towers Watson index showed a further fall in premiums in the first quarter of the year. Esure Group leads the FTSE 250 lower, down 7.0%, with Direct Line and Admiral Group also amongst the big losers.
Tesco's shares are lower after data from Kantar on Tuesday that showed industry growth continued to slow and that the "big four" supermarkets underperformance accelerated to negative 3.1%. Tesco has the worst growth rate of negative 7%, according to analysts at Deutsche Bank.
Major currency pairs remain muted. With little data to go on both the pound and the euro are fairly flat against the dollar, currently trading at USD1.6742 and USD1.3793 respectively.
After gold pushed to a two-week high on Tuesday as tension mounted in Ukraine, precious metal prices have softened a little Wednesday. Gold is down about USD10 from Tuesday's high, currently trading at USD1,303.65, while silver is down to a weekly low of USD19,75 per ounce.
By Jon Darby; [email protected]; @jondarby100
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