Busy day ahead with Fed top of the bill

Summary:

  • Apple shares jump after earnings update

  • Rise leads S&P500 to new record highs

  • Busy economic calendar with Fed decision (7pm BST) the highlight

 

There were more gains for US stock futures after the closing bell last night with the S&P500 surging to a new record high following the release of Apple’s latest trading update. Apple beat expectations on both the top and bottom line in what was an all round solid report and the stock was up as much as 5% in after hours trade. Traders will no doubt be watching the market closely when it opens at 2:30PM this afternoon, but that’s not the only thing to keep an eye on with several key events due in the next 12 hours culminating in the Fed rate decision at 7PM (BST). It is worth noting that with much of Europe off for a Labour day bank holiday, some markets are closed such as the German Dax. Here’s a run through of the main things to look out for on the economic calendar, all times are BST:

 

UK Manufacturing PMI (9:30) 53.2 exp vs 55.1 prior: Last month saw a bumper increase in this measure of the sector, although a lot of the strength was actually caused by Brexit stockpiling. Now that the deadline has been pushed back till the end of October it wouldn’t be too surprising to see some kind of unwind and traders will be looking for signs of how the UK economy is performing ahead of tomorrow’s Bank of England rate decision. The pound enjoyed a good day yesterday, rising over 100 pips against the US dollar and in doing so moved back above the $1.30 handle.

 

ADP Employment Change (13:15) 181k exp 129k prior: This private release is widely seen as a precursor to Friday’s jobs report and goes some way to shaping expectations for NFP. After a soft reading last time out, the ADP is predicted to bounce back in April. The USD came under a bit of pressure yesterday as it pulled back from its highest levels of the year and if there’s a miss here and in the following ISM release then there could well be a little bit more selling seen in the Fed.

 

ISM Manufacturing PMI (15:00) 55.0 exp vs 55.3 prior: Manufacturing is in focus this week and after some soft figures from China on Tuesday morning the markets will be keen to see how the world’s largest economy is holding up. A print of 55.0 expected is still well above many of its peers, but there remains some concerns as to the strength of the global economy and manufacturing in the US is seen as one of the key metrics to follow. Also keep an eye out for the employment component which could reveal some further information ahead of Friday’s NFP.

 

DOE crude oil inventories (15:30) 1.3M exp vs 5.5M prior: It’s been a bit of a rollercoaster ride for the oil price of late with the market surging to a 2019 high at the start of last week before dropping sharply on Friday to post a weekly loss. The main driving force is the supply situation in Iran and whether the US will grant waivers to imports from Tehran, but that doesn’t mean that US inventory figures won’t have an impact. The consensus forecast is for a build of 1.3M after a rise of 5.5M last time out and last night’s API release suggests we could be in for an upside surprise, with the private number showing a build of 6.9M.

 

Fed rate decision (7PM), Powell press conference (7:30) No change expected: The main event of the day comes this evening as the US central bank announce their latest interest rate policy. Any change in the Fed funds rate would be a huge surprise, but that’s not to say the event won’t have an impact as even slight adjustments in the language of the monetary policy statement or the press conference from Chair Powell can cause large moves in the markets. The markets are now pricing in a rate cut occurring before another hike and are expecting a pretty dovish message from Powell. US President Trump once more ratcheted up pressure on the bank yesterday in calling for rates to be cut and any comments on the possibility of rate cuts could be amongst the most noteworthy.


 
Daily summary: Global stocks finish week in upbeat mood
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Morning wrap (27.11.2020)
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