Investing.com – Here are the top five things you need to know in financial markets on Wednesday, December 19:
1. Markets Await Fed Announcement, Powell
The Federal Reserve is almost certain to raise interest rates by a quarter point for a fourth time this year at the conclusion of today’s policy meeting at 2:00PM ET (19:00 GMT).
That would put the fed funds target range in a range between 2.25%-2.5%.
Fed Chair Jerome Powell will hold what will be a closely-watched press conference 30 minutes after the release of the Fed’s statement.
The U.S. central bank will also release new forecasts for economic growth and interest rates, known as the “dot-plot”, as investors look for greater signs of the Fed’s likely rate hike trajectory through 2019 and beyond.
While policymakers have pointed to three increases in 2019, the market is starting to bet the U.S. central bank may halt its rate hikes altogether next year as risks to the U.S. economy mount.
2. U.S.-China Plan January Talks
The U.S. and China held vice-ministerial level talks to discuss the ongoing trade dispute as they move closer to meeting in January.
The two sides spoke by phone earlier today according to China’s Ministry of Commerce.
Both sides are now focused on trying “to document an agreement” by a March 1 deadline for their current tariffs truce to run out, according to Treasury Secretary Steven Mnuchin.
U.S. President Donald Trump and Chinese President Xi Jinping agreed last month to hold off on additional tariffs on each other’s goods for 90 days in order to allow for negotiations to continue.
Washington and Beijing have been engaged in a trade dispute for the most part of the year, with both countries slapping tariffs on several of each other’s products.
3. U.S. Futures Point to Higher Open
U.S. stock futures pointed to a higher open, with the Dow pointing to a triple-digit gain, as signs of progress in the U.S.-China trade dispute lifted sentiment, while traders eagerly awaited the Federal Reserve’s latest monetary policy decision.
At 5:35AM ET (10:35 GMT), the blue-chip Dow futures were up 188 points, or around 0.8%, the S&P 500 futures rose 20 points, or about 0.8%, while the tech-heavy Nasdaq 100 futures indicated a gain of 55 points, or roughly 0.85%.
The move in premarket comes after another volatile session on Tuesday, which saw the S&P 500 close just above its 2018 low.
Elsewhere, European shares rose cautiously, with gains in the banking and the pharmaceutical sectors lifting the market.
Earlier, Asian shares ended broadly lower, with Japan’s Nikkei losing 0.6%, while markets in mainland China fell over 1%.
4. U.S. Dollar, Treasury Yields Edge Lower
Away from equities, the U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.3% at 96.27, hovering near a one-week low.
The greenback was weaker against the yen, with USD/JPY losing 0.15% to trade at 112.35. It earlier reached the lowest since Oct. 29 at 112.60.
The euro pushed higher, with EUR/USD rising 0.35% to 1.1400, its best level since Dec. 10.
The pound was also higher, with GBP/USD advancing 0.15% to 1.2660 amid an ongoing political deadlock over Britain’s efforts to exit the European Union.
In the bond market, U.S. Treasury yields inched lower, with the benchmark 10-year note slipping to 2.799%, their lowest levels since May, before bouncing back to 2.817%.
The yield on U.S. government bonds with 2-year maturities dipped to a three-month low of 2.629%. It was last at 2.65%, a massive turnaround from November’s 2.977% peak.
5. Oil Attempts to Find Footing After Bloodbath
In commodities, oil prices attempted to find their footing after suffering one of its biggest falls in years in the last session.
U.S. West Texas Intermediate crude futures were up 5 cents, or roughly 0.1%, at $46.65 a barrel. It tumbled 7.3% on Tuesday to settle at its lowest since August 2017.
International Brent crude oil futures rose 18 cents, or 0.3%, to $56.45 per barrel. It dropped 5.6% a day earlier, at one point hitting a 14-month low.
Adding to worries about oversupply, the American Petroleum Institute said on Tuesday that U.S. crude stocks rose unexpectedly last week, while gasoline inventories increased.
If the build in U.S. crude stockpiles is confirmed by U.S. government data on Wednesday, it will be the first increase in three weeks.
Crude oil has lost over a third of its value since October in what has become one of the biggest declines since a price collapse in 2014, with surging supply and the specter of faltering demand scaring off investors.
Read more: Will Oil Be Testing $40 Before Year End?: Barani Krishnan
— Reuters contributed to this report