Friday, 3 March 2017
Wall Street to open lower ahead of Fed’s Yellen remarks
US stock index futures were pointing to a lower opening in pre-session hours on Friday as market participants eyed Fed Chairwoman Janet Yellen’s speech and prepared for a fresh batch of key economic reports later in the day.
On Thursday, US equity markets closed in red territory as investors opted for a moderate positioning ahead of Yellen’s words. The US dollar extended gains after Trump’s recent address to the Congress, damping demand for safe-haven assets all across the board.
On the earnings front, Snap - well-known for its social media app Snapchat - priced its initial public offer (IPO) above $17 per share, rising more than 50 percent during the session.
- Dow Jones Industrial Average: -0.31 percent / 21,053 points
- Standard & Poor’s 500: -0.43 percent / 2,385 points
- Nasdaq Composite: -0.48 percent / 5,875 points
While traders await for further details on President Trump’s economic policies, focus has shifted to the next monetary meeting of the Federal Open Market Committee. The regulator is gathering on March 13 to kick off a two-day meeting in which US benchmark rates will be in the spotlight.
According to fed funds tracked by CME Group’s, traders are currently pricing in around 80 percent odds of a rate hike. Expectations for an early adjustment spiked last week, when Fed Yellen and FOMC minutes played out a hawkish tone regarding US rate movements.
Speculation over this issue continued to grow after pro-hike remarks from Fed Governor Lael Brainard, who is renowned by her dovish stand on the rate normalization process.
"We are closing in on full employment, inflation is moving gradually toward our target, foreign growth is on more solid footing, and risks to the outlook are as close to balanced as they have been in some time," said Brainard on Wednesday.
Friday will be a strong day for economic data. Markit is due to release its composite and services PMI for February as of 14:45 GMT, with forecast for the latest at 53.9 points. The Institute of Supply Management will also be presenting non-manufacturing employment and PMI readings at 15:00 GMT. For commodity traders, focus will be placed at Baker Hughes weekly oil rig count, which is scheduled as usual at 18:00 GMT.
A series of FOMC officials will be speaking during the session, including Fed Bank of Richmond President Jeffrey Lacker at 15:15 GMT and Fed Governor Jerome Powell at 17:15. The speech of Fed Chair Yellen will begin at 18:00 GMT. Fed Vice Chair Stanley Fischer is also expected to make some remarks around that same time.
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