MARKETS USA/stock exchanges firmly expected – waiting for Fed

NEW YORK (Dow Jones) — Wall Street is set to open Wednesday after a week of severe market turmoil. Speculations about the future interest rate of the US central bank and the geopolitical tensions surrounding Russia and Ukraine have caused great nervousness on the markets. The futures contract on the S&P 500 is currently up 1.6 percent.

The focus of investors is on the US Federal Reserve’s upcoming monetary policy decisions in the evening (8:00 p.m. CET) in view of the extremely high inflation in the country. An initial rate hike is not expected until March, but there is uncertainty about how many rate hikes are still pending this year and how severe they will be. Four rate hikes are considered priced in by the market so far. However, there has already been speculation about five and even more. In addition, one is hoping for indications of the pace and extent of the reduction in the large central bank balance sheet. Statements by US Federal Reserve Chairman Jerome Powell at the subsequent press conference are therefore eagerly awaited.

With markets concerned about the impact of excessively tightening funding conditions, the Fed chairman is likely to act cautiously and not add fuel to the fire, Commerzbank said. This applies in particular to the balance sheet reduction (QT), which is coming into focus due to the already advanced interest rate expectations. Although fundamentals tend to favor a faster balance sheet rundown, Powell is likely to reiterate his signals from last week’s Senate hearing (QT sometime later this year).

On the economic side, sales of new builds for December are on the agenda shortly after the starting bell. In addition, the weekly data on crude oil inventories from the state Energy Information Administration (EIA) will be released. The private API data presented the previous evening had shown a drop of 872,000 barrels.

The current reporting season should also cause movement in individual stocks. Only after the close of trading will Intel, Tesla and Qualtrics provide insights into the course of business.

Microsoft and Texas Instruments searched for numbers

Microsoft already presented business figures for the second business quarter late on Tuesday and gave a confident outlook. The tech giant earned more than expected thanks to strong cloud business. In addition, sales broke the $50 billion mark for the first time. The stock is up 5.2 percent premarket.

Chipmaker Texas Instruments benefited from strong demand from industry and the auto sector in its final quarter of 2021 and exceeded analysts’ expectations on the earnings side. The outlook also surprised positively. The stock is up 4.7 percent.

Boeing (+1.9%) posted another loss in the fourth quarter due to a heavy burden from the 787 Dreamliner delays. Contrary to market expectations, sales also fell in the three months.

The telecommunications and media group AT&T (+2.2%) made a profit after the horrendous loss in the previous year, which turned out to be higher than analysts had expected. However, the outlook fell short of expectations.

Intel shares are up 1.7 percent. The chip company has won a case against a multi-billion euro EU antitrust fine from 2009. The General Court of the European Union (CJEU) in Luxembourg partially annulled the decision, with which the Commission had imposed a fine of 1.06 billion euros at the time.

Abbott Laboratories (-1.2%) increased sales in the fourth quarter, beating market expectations. However, the profit fell slightly.

Stock exchange operator Nasdaq (+0.6%) increased its sales and profits in the past quarter thanks to both acquisitions and organic growth.

Dollar slightly firmer ahead of Fed

In the FX market, the dollar is somewhat firmer ahead of the US Federal Reserve Board meeting. The dollar index gained 0.2 percent. For Commerzbank analyst Antje Praefcke, when the results of the meeting are announced in the evening, a restrictive surprise is “hardly possible”. A very strong upswing is therefore not to be expected for the dollar.

Oil prices are increasing. The private API data presented the previous evening had shown a drop in inventories by 872,000 barrels. Gasoline inventories, meanwhile, were reported up 2.4 million barrels. Market participants also refer to the ongoing geopolitical uncertainties surrounding Russia.

On the bond market, the yield on ten-year paper rose by 0.6 basis points to 1.78 percent as prices fell.


US Bonds

Term Yield Bp to VT Yield VT +/-Bp YTD

2 years 1.03 +1.6 1.01 29.9

5 years 1.57 +1.9 1.56 31.5

7 years 1.73 +0.6 1.72 28.6

10 years 1.78 +0.6 1.77 27.0

30 years 2.13 +0.7 2.12 22.5

FOREX last +/- % Wed, 8:03 Tue, 17:30 % YTD

EUR/USD 1,1272 -0,3% 1,1294 1,1281 -0,9%

EUR/JPY 128,81 +0,1% 128,69 128,51 -1,6%

EUR/CHF 1,0381 +0,1% 1,0374 1,0368 +0,1%

EUR/GBP 0,8348 -0,3% 0,8366 0,8363 -0,7%

USD/JPY 114,28 +0,4% 113,93 113,92 -0,7%

GBP/USD 1,3506 -0,0% 1,3504 1,3490 -0,2%

USD/CNH (Offshore) 6,3249 -0,1% 6,3272 6,3337 -0,5%


BTC/USD 37,980.36 +3.2% 37,256.53 36,757.23 -17.9%

CRUDE OIL last VT-Settl. +/- % +/- USD % YTD

WTI/Nymex 87,18 85,60 +1,8% 1,58 +16,4%

Brent/ICE 89,46 88,20 +1,4% 1,26 +14,8%

METALS last day before +/- % +/- USD % YTD

Gold (Spot) 1.847,29 1.848,03 -0,0% -0,74 +1,0%

Silver (Spot) 23.94 23.81 +0.6% +0.13 +2.7%

Platinum (Spot) 1,057.55 1,028.87 +2.8% +28.68 +9.0%

Kupfer-Future 4,52 4,45 +1,5% +0,07 +1,2%


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(END) Dow Jones Newswires

January 26, 2022 08:49 ET (13:49 GMT)

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