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The Wednesday Market Minute

  • Global stocks grind higher as central bank officials continue to placate inflation concerns, while bond markets remain steady ahead of Friday’s PCE index release.
  • Fed vice chairman Richard Clarida repeats view that bond purchase tapering remains a long way off, adding the central bank can engineer a ‘soft landing’ if inflation were to derail the U.S. recovery. 
  • Benchmark 10-year note yields ease to 1.577% in overnight trading while the dollar index added 0.1% to trade at 89.731.
  • CDC data shows 131.1 million Americans have now been fully vaccinated against the coronavirus, with around 287.8 million doses administered as of Tuesday.
  • U.S. equity futures suggest a firmer open on Wall Street ahead of Ford Motor’s capital markets day and the results of a boardroom election battle at Exxon Mobil.

Wall Street futures moved higher Wednesday, powered by largely the same pre-market themes that have taken stocks higher this week: a compliant Federal Reserve, re-opening trade momentum and stable bond markets. 

Quickening inflation, with headline CPI running at its hottest rate since 2009, has triggered a host of comments from Fed officials determined to hold firm on their narrative that price increases — driven largely by base-effects and bottlenecks — will eased into the latter half of the year. 

Fed vice chairman Richard Clarida held that line yesterday when he told a Yahoo Finance event that scaling back the central bank’s $120 billion in monthly bond purchases, the first step towards moving interest rates higher, “was not the focus” of the Fed’s last meeting.

“There will come a time in upcoming meetings we will be at the point where we can begin to discuss scaling back the pace of asset purchases,” he said, but that will “depend on the flow of data”.

Bond markets certainly seem satisfied with the Fed’s approach, with benchmark 10-year note yields — a key indicator for tech stock movements — easing to 1.577% in overnight trading and the dollar holding nearly 5 month lows of 89.752 against a basket of its global currency peers.

Stock futures, meanwhile, are set up for a solid start to the Wednesday session, with contracts tied to the Dow Jones Industrial Average indicating a 90 point opening bell gain and those linked to the S&P 500, which is up 11.5% for the year, priced for an 11 point gain.  

Nasdaq Composite futures are indicating a more modest 35 point advance for the tech-focused benchmark. 

Stocks to watch today include Exxon Mobil  (XOM) – Get Report, which is marked 0.75% higher in pre-market trading, as results of the oil major’s boardroom elections trickle-in later this morning, with activists pushing for new blood in order to address the issues of climate change to the group’s business.

Ford  (F) – Get Report will also be in focus as the carmaker hosts its first capital markets day under CEO Jim Farley, with investors looking for clarity on the group’s electric vehicle plans and an updated assessment on the impact of the global semiconductor shortage. Ford shares were last seen 1.5% higher in pre-market trading at $13.00 each.

Overnight in Europe, stocks extended gains to a fifth consecutive session — the longest winning streak of the year — with the Stoxx 600 rising 0.2% to a near record high of 446.25 points and Britain’s FTSE 100 adding 0.12% in London.

Gold prices edged past the $1,900 mark in overnight trading, and into positive territory for the year, amid a pullback in the broader commodity complex and a weaker U.S. dollar. Bitcoin prices, too, crossed an important psychological barrier by rising back above the $40,000 mark following last week’s collapse.

Oil prices were moving modestly higher in early Wednesday trading ahead of today’s Energy Department data on crude supplies, with the American Petroleum Institute reporting a 620,000 barrel gain from their private reading last night. 

WTI futures for July delivery were marked 6 cents higher at $66.13 per barrel while Brent contracts for the same month, the global benchmark, added 21 cents to $68.86 per barrel. 

In Asia trading, Japan’s Nikkei closed 0.31% higher at 28,6412.19 points while the region-wide ex-Japan index added 0.4% heading into the final hours of trading.