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Opening Bell: U.S. Futures Drop As Fed Tilts Hawkish; FedEx Plummets

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewSep 19, 2019 08:25AM ET
www.investing.com/analysis/opening-bell-us-futures-drop-as-fed-tilts-hawkish-fedex-plummets-200466056
Opening Bell: U.S. Futures Drop As Fed Tilts Hawkish; FedEx Plummets
By Investing.com (Pinchas Cohen/Investing.com)   |  Sep 19, 2019 08:25AM ET
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  • U.S. futures slip on uncertainty over Fed path to lower rates

  • European shares, euro climb with bank stocks

  • Yen leaps as BoJ bucks Fed, ECB rate cuts

  • FedEx stock plunges as group's warning of economic slowdown heightens investor worries

Key events

Futures on the S&P 500, Dow and NASDAQ 100 dropped this morning on increased uncertainty over the Fed path to lower interest rates, while Europe's STOXX 600 climbed with the euro as bank shares rallied on the outlook interest rates may not fall by as much as previously expected.

S&P 500 Futures Daily Chart
S&P 500 Futures Daily Chart

U.S. contracts were showing a different behavior, posting an early dip that retested yesterday’s lows. SPX futures fell for seven out of 10 hours after investors realized the Fed may lack consensus to be as accommodative with the market as some hoped, even after the central bank implemented a widely-expected 0.25% rate cut on Wednesday.

In the earlier Asian session, most regional indices climbed, with Australia’s S&P/ASX 200 (+0.54%) outperforming. Hong Kong’s Hang Seng (-1.07%) was the only major index to close in the red, as civil unrest in the city continued.

The Chinese yuan dropped as traders weighed the odds of the People’s Bank of China lowering borrowing costs.

Meanwhile, the Bank of Japan maintained its key rate unchanged, bucking looser monetary policy from the Fed and the ECB.

Nikkei 225 Daily Chart
Nikkei 225 Daily Chart

The yen jumped after the central bank’s announcement, erasing yesterday’s losses, with the USD/JPY finding support by the 100 DMA. The currency's climb partly pared gains on the Nikkei 225, turning the equity index's session trading pattern into a shooting star, confirming the April highs’ resistance.

Global Financial Affairs

In yesterday’s U.S. session, stocks ended little changed after a divided Fed demonstrated a murky path to lower rates, with only one FOMC member seeking a bigger rate cut and two opposing any hike at all. Intraday, the S&P 500 recorded the worst drop in four weeks. Fed Chairman Jerome Powell, however, vowed to be vigilant against any signs of economic slowdown.

UST 10-Year Daily Chart
UST 10-Year Daily Chart

In bond markets, yields on 10-year Treasurys slipped for the fourth consecutive session. Technically, the yield is squeezed between the 100 and 50 DMAs upon nearing the downtrend line since November 2018, at the 2% key level.

Overall, lingering fears of a recession maintain pressure on yields.

Case in point, FedEx (NYSE:FDX) stock sank on Wednesday as the company slashed its profit outlook and missed earnings expectations, blaming slowing economic growth caused by the U.S.-China trade dispute. The group's shares plunged about 14% to less than 1% from the Aug. 27 low—which in turn marked the lowest price since June 2016. Mad Money host Jim Cramer characterized FedEx guidance as the “most dispiriting call about the economy I’ve heard in a very long time.”

Meanwhile, the Dollar Index pared half of yesterday’s gains.

The Australian dollar dropped for the second day after fresh figures showed the country’s unemployment rate ticked higher in August. Technically, the AUD/USD is within 1% of its Aug. 7 low, the lowest since March 2009.

Up Ahead

  • Quarterly expiration of futures and options on indexes and stocks on Friday could add to this week's key calendar events to boost volatility.

Market Moves

Stocks

  • Germany’s DAX rose 0.1%.
  • The U.K.’s FTSE 100 was little changed.
  • The MSCI Asia Pacific Index decreased 0.1%.
  • Currencies

  • The Dollar Index declined 0.6%.
  • The euro climbed 0.1% to $1.1039.
  • The British pound was little changed at $1.2468.
  • The Japanese yen gained 0.4% to 108.07 per dollar.
  • Bonds

  • The yield on 10-year Treasurys gained less than one basis point to 1.80%.
  • Britain’s 10-year yield climbed three basis points to 0.669%.
  • Germany’s 10-year yield rose two basis points to -0.49%.
  • Commodities

  • Gold was little changed at $1,494.24 an ounce.
  • West Texas Intermediate crude was little changed at $58.12 a barrel.
  • Brent crude was little changed at $63.62 a barrel.
  • Opening Bell: U.S. Futures Drop As Fed Tilts Hawkish; FedEx Plummets
     
    Opening Bell: U.S. Futures Drop As Fed Tilts Hawkish; FedEx Plummets

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    Rio Fadly
    Rio Fadly Sep 19, 2019 8:31AM ET
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    sir don't forget Crypto currency analysis
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    Pinchas Cohen Sep 19, 2019 8:31AM ET
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