Twitter’s wild overnight ride and FOMC preview
Stock markets around the world are mixed today as traders await today’s FOMC decision. Since the last meeting, Fed speakers have taken a somewhat hawkish tone with many including Chair Yellen and Vice Chair Fischer expecting 1-2 interest rate increases this year.
The Fed is not expected to raise interest rates today, but with many traders expecting a September liftoff (which would enable 2 increases this year at a gradual every other meeting pace), traders may be looking to today’s statement for any signs of when liftoff may come.
Some of the signs of a September liftoff may include:
Comments related to a strong economy or labour market, increasing wage growth,
Any hawkish dissenters in the voting. So far this year, hawkish leaners have stayed with the party line
Recent gains in USD and losses in gold suggest that may traders are expecting interest rate liftoff in September, which may already be priced into markets. Because of this, a more dovish Fed could be seen as more of a surprise.
Signs the Fed could be prepared to delay liftoff may include
Comments related to falling commodity prices and rising deflation risks
Any comments related to growing concerns about destabilization from external crises, particularly Puerto Rico which the US has the greatest exposure to.
Markets that could be active on the news include USD against EUR, CAD, JPY, GBP and other majors, gold, crude oil and US indices.
While traders are waiting for the Fed decision, there could be action in technology stocks, particularly Twitter in the wake of last night’s earnings report. Yesterday’s better than expected earnings report and improved guidance boosted the shares initially in aftermarket trading overnight. Sentiment then turned sharply bearish as management cooled expectations of an immediate big turnaround, indicating it still faces significant challenges and de-emphasizing its search for a new CEO. The big question now is whether the shares can stabilize or if they fall to new 52-week lows. Facebook may also be active today ahead of its earnings report this afternoon.
Twitter $0.07 vs street $0.04, sales $502M above street $481M, raised full yar sales forecast to $2.20-$2.27B
Citrix Systems $1.00 vs street $0.82, guides next Q to $0.83-$0.85 below street $0.89, CEO Templeton to retire soon, looking into spinoff of Go To business.
Significant announcements released overnight include:
Japan retail sales street 1.1%
Spain retail sales street 3.6%
Sweden consumer conf street 98.9
Norway unemployment rate street 4.3%
UK CBI sales street 29
Upcoming significant announcements include:
10:00 am EDT US pending home sales street 11.1%
10:30 am EDT US DOE crude oil inventories street 0.85 mmbbls
2:00 pm EDT US FOMC interest rate 0.25% no change expected
Facebook to report earnings after the close tonight
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