Futures Pointing To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to move back to the upside following the pullback seen in the previous session.

The upward momentum on Wall Street comes as traders look to the Federal Reserve’s highly anticipated monetary policy announcement on Wednesday.

The Fed is widely expected to raise interest rates by another 75 basis points, but traders are optimistic the central bank will signal plans to slow the pace of rate hikes at upcoming meetings.

Stocks may also benefit from unconfirmed reports China plans to ease its disruptive COVID-Zero policy by the end of this year.

U.S. stocks drifted lower on Monday, with investors making cautious moves as they continued to react to recent quarterly earnings updates from big-name companies and looked ahead to the Federal Reserve’s policy announcement due on Wednesday.

The major averages all ended on a negative note but still managed to post monthly gains after recording losses in the previous two months.

The Dow ended the session with a loss of 128.85 points or 0.4 percent at 32,732.95. The S&P 500 settled with a loss of 29.08 points or 0.8 percent at 3,871.98, while the Nasdaq dropped 114.31 points or 1.0 percent to settle at 10,988.15.

The Dow posted a gain of almost 14 percent in October, the biggest monthly return since January 1976. The S&P 500 and the Nasdaq added more than 0.8 percent and 0.4 percent, respectively, in the month.

The Fed, which is set to meet on Tuesday and Wednesday, is widely expected to raise interest rate by another 75 basis points – its fourth straight rate hike – to fight soaring inflation.

Among the prominent losers in the session was Apple Inc. (AAPL), which fell more than 1.5 percent on reports the production of the company’s iPhones could drop by around 30 percent next month. A surge in Covid-19 curbs in China is cited as the reason for the likely drop in production.

Amazon (AMZN), Microsoft (MSFT) and Alphabet (GOOGL.TO) shed about 1 percent, 1.6 percent, and 1.8 percent, respectively. Shares of Meta Platforms (META) plunged more than 6 percent.

Intel (INTC) lost about 2.2 percent. Coco-Cola (KO), American Express (AXP) and Amgen (AMGN) lost 1.3 to 1.4 percent. Visa, Boeing, Home Depot, Verizon and McDonalds also closed lower.

Meanwhile, Travelers Companies (TRV) gained nearly 1.5 percent. Goldman Sachs (GS), United Health (UNH), Walt Disney (DIS), Chevron (CVX) and Merck (MRK) also ended higher.

Commodity, Currency Markets

Crude oil futures are jumping $1.87 to $88.40 a barrel after slumping $1.37 to $86.53 a barrel on Monday. Meanwhile, after slipping $4.10 to $1,640.70 an ounce in the previous session, gold futures are climbing $18 to $1,658.70 an ounce.

On the currency front, the U.S. dollar is trading at 147.05 yen compared to the 148.71 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $0.9946 compared to yesterday’s $0.9882.

Asia

Asian stocks advanced on Tuesday, the dollar eased on improved risk sentiment and bond yields dipped as investors braced for a hefty rate hike from the Federal Reserve.

The U.S. central bank is likely to raise interest rates by 75 basis points at the conclusion of its two-day policy meeting on Wednesday, but investors will look for any signals the Fed will begin to taper the size of its rate hikes going forward.

Chinese shares led regional gains amid hopes that the country will ease its disruptive COVID-Zero policy by the end of this year.

The benchmark Shanghai Composite index jumped 2.6 percent to 2,969.20 as the Caixin PMI data for China’s factory activity came in slightly better than expected.

Hong Kong’s Hang Seng Index surged 5.2 percent to 15,455.27 despite weak GDP data for the third quarter, with the economy recording its worst quarter in more than two years.

China’s yuan hit a near 15-year low against the dollar earlier in the session after the People’s Bank of China set the official guidance rate at its lowest level since the global financial crisis of 2008.

Japanese shares eked out modest gains on the back of positive earnings from the likes of Japan Tobacco and Panasonic Holdings. Toyota Motor dropped 1.9 percent after posting weaker-than-expected earnings.

The Nikkei 225 Index edged up 0.3 percent to 27,678.92, while the broader Topix gained 0.5 percent to settle at 1,938.50.

The yen strengthened a little bit after the finance ministry said Japan had spent a record $42.8 billion on currency intervention last month to prop up the yen, the finance ministry said in a statement.

Seoul stocks posted strong gains, with technology and chemical shares pacing the gainers. The Kospi ended up 1.8 percent at 2,335.22.

Australian markets rallied to close at a seven-week high after the country’s central bank stuck with a slower pace of interest rate rises for a second month, but hiked its inflation forecast and trimmed its GDP outlook.

The benchmark S&P/ASX 200 Index climbed 1.7 percent to 6,976.90, while the broader All Ordinaries Index closed 1.6 percent higher at 7,169.60, with miners and financials leading the surge.

Europe

European stocks have moved sharply higher on Tuesday as traders hold out hopes for a slowdown in some central banks’ rate hikes.

The U.S. dollar edged lower and Eurozone yields fell as focus shifted to a two-day policy meeting of the Federal Reserve that gets underway later today.

It is widely believed that Fed might signal a slowdown of its tightening path after delivering a 75 basis point rate hike on Wednesday.

Doubts remain, however, about whether the Fed will soften hits hawkish stance amid many risks surrounding the inflation outlook.

The Bank of England is scheduled to announce its policy decision on Thursday, with economists expecting a 75 basis point rate hike.

While the French CAC 40 Index has jumped by 1.6 percent, the U.K.’s FTSE 100 Index is up by 1.4 percent and the German DAX Index is up by 1.3 percent.

Credit Suisse has moved to the upside after the Swiss lender confirmed an extraordinary general meeting will take place on November 23 to approve a proposed capital increase.

Miners Anglo American, Antofagasta and Glencore have also surged in London after reports emerged that China is looking at ways to exit its zero-COVID policy.

Peer Shell and TotalEnergies has also moved higher, tracking higher oil prices after OPEC raised its forecasts for world oil demand in the medium and longer-term in an annual outlook released on Monday.

Shares of online grocery store Ocado has also soared after the company partnered with South Korean retail company Lotte Shopping.

On the other hand, Westminster Group has plunged after the supplier of managed services and technology-based security solutions said that fiscal 2022 revenue outturn will be approximately a third below market expectations.

U.S. Economic Reports

The Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of October at 10 am ET. The manufacturing PMI is expected to edge down to 50.0 in October from 50.9 in September.

Also at 10 am ET, the Commerce Department is due to release its report on construction spending in the month of September. Economists expect construction spending to decrease by 0.5 percent.