US stocks set to gain as investors await the first Fed meeting of 2019 and a tech earnings bonanza

  • US stocks are set to rally as investors await the Federal Reserve’s policy decision later on Wednesday and before earnings from tech heavyweights Facebook, Microsoft and Alibaba.
  • Gold hovered near an eight-month high ahead of US-China trade talks, which begin today.
  • The pound steadied after a two-day decline amid fresh worries about the UK crashing out of the European Union without a deal.

US stocks are set to rally as investors await the Federal Reserve’s policy decision later on Wednesday and before earnings from tech heavyweights Facebook, Microsoft and Alibaba.

Gold reached an eight-month high as investors sought a safe haven while navigating a minefield of global market catalysts.

The pound steadied after a two-day decline as investors worry again about the prospect of the UK crashing out of the European Union without a deal.

A Reuters poll found that traders are pricing in only a slight chance of one rate increase for 2019 as a whole, though most economists expect two, in the second and fourth quarters. Fed Chairman Jerome Powell will give a press conference in Washington after the FOMC rate decision.

Here’s the roundup as of 12.00 p.m. in London (7.00 a.m. in New York)

  • The Shanghai Composite Index and the Nikkei fell at least 0.5% each. The Hang Seng gained 0.4%
  • The Euro Stoxx 50 was flat, up 0.1%, the German Dax Index fell 0.1%, and France’s CAC Index rallied 0.7%.
  • Futures for the S&P 500 and Dow were up at least 0.3%, those on the Nasdaq were up 0.8%
  • Gold futures were up $US3.65, or about 0.3%, at $US1,312.65

“The market is expecting a more cautious Fed with the possibility of a rate hike in the near term being ruled out,” said Jasper Lawler, Head of Research at London Capital Group. “As the US data starts to feed through following the US government shutdown, it points to slower growth. Not the environment for further hikes.”

Among catalysts for markets on Wednesday:

  • Facebook and Microsoft are among companies due to report earnings today, along with Alibaba, Qualcomm, Tesla, Samsung, and Sony.
  • China trade talks kick off in Washington today and will continue tomorrow.
  • Apple’s share price is up 5.5% in premarket trading after its Q1 earnings were broadly in line with expectations set in an earnings warning earlier this month.

The pound shivers amid Brexit woes

The pound dropped significantly as lawmakers voted against a plan that would have ruled out a so-called hard Brexit, or leaving the European Union without a deal. It has found a support level and is steadying at about 1.3113 to the US dollar. Prime Minister Theresa May will now re-start talks with the EU.

“The market was clearly not cheered by a result that legally keeps no deal on the table, given that sterling has responded by surrendering some of its recent gains,” said Geoffrey Yu, head of the UK investment office at UBS Global Wealth Management. “Investors would have appreciated a more conclusive view on rejecting such an outcome.”

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