Before the Bell: Sept 21
Wall Street futures were steady early Wednesday as traders await this afternoon’s rate decision from the Federal Reserve. Major European markets were mixed. TSX futures were little changed with crude prices higher.
In the early premarket period, futures tied to the key U.S. indexes all hovered near breakeven. On Tuesday, all three saw losses with the S&P 500 falling 1.13 per cent while the Dow slid 1.01 per cent. The Nasdaq finished down 0.95 per cent. The S&P/TSX Composite Index closed the session off 0.99 per cent.
For traders, the day’s key event will be the Fed’s rate decision, due at 2 p.m. Markets have priced in another 75-basis-point hike but investors will also be watching closely for hints about how aggressive the central bank expects to be in the months ahead as it battles inflation.
“Activity on Fed funds futures still assesses less than 20-per-cent probability for a 100-basis-point hike from the Fed today,” Swissquote senior analyst Ipek Ozkardeskaya said. “And more importantly, the FOMC doesn’t have a modern history of making abrupt moves, except for dovish moves which have a sudden positive impact on the markets, like the ones we saw during the pandemic.”
“So, the expectation is that the Fed will deliver a 75-basis-point hike today,” she said. “We could see a relief rally in equity and bond markets, if, of course, the dot plot doesn’t show projections going above market expectations.”
Earlier, world markets were rattled by new comments from Russian President Vladimir Putin. The Globe’s Mark MacKinnon reports Mr. Putin has doubled down on his war against Ukraine, ordering a partial mobilization of reservists and warning that his country was willing to use its nuclear arsenal if Russian territory was attacked.
In this country, Aurora Cannabis Inc. says its net loss widened to $618.8-million in its most recent quarter from $134-million last year as it recorded $505.1-million in impairment charges. Aurora reported net revenue for the quarter ended June 30 of $50.2-million, down 8 per cent from $54.8-million the year before. The results were released after Tuesday’s closing bell.
Overseas, the pan-European STOXX 600 edged up 0.32 per cent. Germany’s DAX and France’s CAC 40 slid 0.19 per cent and 0.13 per cent, respectively. Britain’s FTSE 100 rose 0.53 per cent.
In Asia, Japan’s Nikkei closed down 1.36 per cent. Hong Kong’s Hang Seng lost 1.79 per cent.
Crude prices jumped after Russian president Vladimir Putin’s announcement of a partial mobilization of reservists heightened concerns over global oil and gas supply.
The day range on Brent was US$90.16 to US$93.50 early Wednesday morning. The range on West Texas Intermediate was US$83.48 to US$86.68.
Putin said he had signed a decree on partial mobilization beginning on Wednesday.
“The move could possibly lead to calls for more aggressive action against Russia in terms of sanctions from the west,” Warren Patterson, head of commodities research at ING, said.
Elsewhere, the American Petroleum Institute reported that U.S. crude inventories rose by about 1 million barrels last week. A Reuters poll of analysts had forecast an increase of more than 2 million barrels. More official U.S. government figures are due later Wednesday morning.
Gold prices, meanwhile, were higher as tensions in Europe sparked renewed interest in safe-haven holdings.
Spot gold was up 0.5 per cent at US$1,670.57 per ounce. U.S. gold futures rose 0.6 per cent to US$1,680.40.
The Canadian dollar was modestly lower, trading under 75 US cents, while its U.S. counterpart hit a two-decade high against a group of world currencies ahead of the Fed’s policy decision.
The day range on the loonie is 74.66 US cents to 74.86 US cents.
On world markets, the U.S. dollar index, which measures the greenback against other major currencies, more than 0.5 per cent higher to 110.87 after Vladimir Putin’s announcement of a partial military mobilization of reservists triggered safe-haven buying. That was its highest level since 2002, according to Reuters.
The euro, meanwhile, fell to a two-week low of US$0.9885, near two-decade lows hit earlier this month. It was last down 0.6 per cent at US$0.9912, according to figures from Reuters.
Britain’s pound fell to a fresh 37-year low of US$1.1304.
In bonds, the yield on the U.S. 10-year note was down slightly at 3.54 per cent.