Good morning,
US futures track European counterparts higher;
Gains come as indices fall to significant technical support levels;
Corporate earnings key to whether this support is broken;
FOMC minutes likely to offer very little.
US futures are pointing to a moderately higher open on Wednesday, with the S&P seen unchanged at 1,851, the Dow 2 points higher at 16,276 and the Nasdaq 3 points higher at 3,541.
The gains come following a fairly positive start in Europe, where the major indices are trading around four tenths of a percentage point higher, with the FTSE leading the way, up 0.7%. It is clear that investors are still holding back quite a bit, with so many headwinds massively reducing their appetite for risk.
The problem we now face is that some of the major indices in the US are now trading near significant support levels. If this is in fact just a brief reprieve, as it would appear, then a break of this support could lead to a much bigger correction of the longer term uptrend, with the S&P breaking back below 1,800 for the first time since early February and the Dow breaking 16,000.
Whether this support is broken could well depend on how the first week of corporate earnings season goes, with JP Morgan and Wells Fargo kicking things off for the banks on Friday, with more major banks to follow next week. Until then there isn’t a huge amount for investors to actually focus on. The key event from now until then will undoubtedly be the release of the FOMC minutes today, but even this could offer very little.
The Fed has been very clear in its stance for many months now and even through the tough winter months refused to slow the rate at which is tapered its asset purchases. With Fed Chair Janet Yellen having already cleared up comments made in the press conference after, in relation to the first interest rate hike, there’s very little these minutes could tell us that would have a considerable market impact.
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