United States stock futures edged modestly higher late Tuesday (Wednesday AEST) as traders awaited the Federal Reserve’s monetary policy decision and its economic outlook, which are expected to shape market sentiment through year-end.
By 9:30 am AEST (11:30 pm GMT), Dow Jones Industrial Average futures, S&P 500 futures, and Nasdaq-100 futures were each up 0.1%.
Markets are almost unanimous in expecting the central bank to deliver a rate cut on Wednesday, a move aimed at supporting the U.S. economy as the labour market shows signs of cooling and inflation remains above the Fed’s 2% target.
ANZ analysts commented in a note to clients, “Ahead of this week’s highly anticipated FOMC meeting, Stephen Miran was sworn in as a member of the Board of Governors. Earlier, he was confirmed by the Senate with a narrow 48:47 vote.
"The development clears the way for him to participate at this week’s meeting, and it is likely that he could vote for an outsized 50bp cut. In addition, Lisa Cook is also set to attend.”
Alongside the rate decision, investors will focus on the Fed’s quarterly Summary of Economic Projections and the “dot plot”, which maps policymakers’ expectations for interest rates over the coming year.
Attention will also centre on potential dissent within the committee, after two policymakers broke ranks at the Fed’s July meeting.
According to the CME Group FedWatch Tool, traders have priced in a 96% probability of a 25-basis-point cut and just 4% odds of a half-point reduction on Wednesday.
