Wednesday March 20th

20-03-2019

US stock futures are little changed as FedEx falls, traders await Fed decision

U.S. stock index futures barely moved on Wednesday as shares of FedEx fell while investors awaited a policy decision by the Federal Reserve. At 7:55 a.m. ET, Dow Jones Industrial Average futures pointed to a drop of just 5 points at the open. S&P 500 and Nasdaq 100 futures were also little changed. FedEx shares fell more than 6.5 percent after CFO Alan Graf warned in the company's quarterly report that "slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue." That warning was followed by UBS CEO Sergio Ermotti saying this is one of the worst first-quarter environments ever as investment banking revenue falls about a third from the year-earlier period. Meanwhile, German auto maker BMW said its earnings could fall significantly in 2019 and added it will cut $13.6 billion in costs. These negative comments come as the U.S. central bank is widely expected to keep rates steady later in the session, with investors monitoring a decision on the Fed's rate projections for the next few years. "The single most prominent bullish influence on stocks right now is the dovish Fed, and the run to fresh five-month highs in the S&P underscored its ability to single-handedly move the market," Tom Essaye, founder of The Sevens Report, said in a note. "The new highs presented an opportunity to revisit the idea that while the Fed has the ability to drive stock prices higher like they currently are, they are also almost always the reason bull markets come to an end." Concerns over global growth and U.S.-China trade talks were also renewed to keep stock gains subdued. Bloomberg News reported some U.S. officials are worried China could walk back on some concessions. However, The Wall Street Journal said U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin both plan to travel to Beijing next week for another round of negotiations with Chinese Vice Premier Liu He. These reports buffeted stocks on Tuesday. The world's two largest economies have imposed tariffs on billions of dollars' worth of one another's goods over the past year, battering financial markets and souring business and consumer sentiment. Shares in major Asian stock markets mostly slipped on Wednesday following a series of conflicting reports on U.S.-China trade that surfaced overnight. The mainland Chinese markets recovered partially from their earlier losses but still ended their trading day lower, with the Shenzhen component declining 0.398 percent to 9,800.60 and the Shenzhen composite shedding 0.248 percent to 1,684.57. The Shanghai composite closed mostly flat at 3,090.64. In Hong Kong, the Hang Seng index declined 0.33 percent in its final hour of trading. Over in South Korea, the Kospi closed largely flat at 2,177.10. The Nikkei 225 in Japan bucked the overall trend as it closed 0.2 percent higher at 21,608.92, while the Topix index ended its trading day 0.26 percent higher at 1,614.39. Oil prices fell on Wednesday, retreating from four-month highs struck in the previous session. Crude futures have drawn support this week from ongoing supply cuts led by producer club OPEC and U.S. sanctions against Iran and Venezuela. However, analysts said concerns over economic growth are weighing on the market and capping gains. International Brent crude oil futures were down 30 cents at $67.31 a barrel around 8:35 a.m. ET (1235 GMT). Brent on Tuesday touched its highest since Nov. 16 at $68.20 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 57 cents, or 1 percent, to $58.46 per barrel. WTI on Tuesday reached its highest level since Nov. 12 at $59.57 a barrel. Crude prices have risen by almost a third this year, pushed up by a move led by OPEC to withhold around 1.2 million barrels per day (bpd) of supply as well as by U.S. sanctions against oil exporters Iran and Venezuela. Spot gold rose 0.1 percent to $1,307.86 an ounce, while U.S. gold futures rose .9 percent to $1,307.70 an ounce. Gold was slightly pressured by a firmer dollar, which garnered some safe-haven demand after overnight news that China is pushing back against U.S. demands in trade talks. The dollar has been the preferred refuge from the U.S.-China trade spat for investors since last year.