US markets look to open lower on Thursday left exposed by neutral Fed minutes to disappointing data in China and Europe ahead of US inflation, manufacturing and housing data and more retailer earnings from Gap, Dollar Tree and Best Buy.
The Fed will probably be deeming yesterday’s minutes a rousing success having minimised market volatility with stocks closing flat on Wednesday. The committee said they would keep their eye on a further downshift in inflation expectations which adds to the import of Thursday’s CPI data.
Given the surprise hawkishness of the latest Fed statement, most had expected the minutes to temper that somewhat by discussing weak European growth and low inflation concerns.
What could be more important for markets going forward is that the Fed again seems terrified of another taper tantrum so changes in language in the statement will likely be very slight in subsequent meetings with “considerable time” likely being left in until next year. This reduces the likelihood of another Fed-induced 10% correction in the near term.
The FOMC’s continued emphasis on data-dependency is also key; it’s win-win for markets, economic data improves that’s good for the economy, economic data deteriorates and the Fed is there to help.
The China HSBC manufacturing PMI dropped to bang on the 50.0 level that denotes expansion. Shares in Shanghai are taking it on the chin with locals positive about the prospect of further intervention from the Chinese state but globally shares are down with the data adding to global growth concerns.
European PMI data was disappointing on Thursday but with still some signs of improvement, this could affect European equities more than American counterparts.
Home improvement retailers Home Depot Inc (NYSE:HD) and Lowe's Companies Inc (NYSE:LOW)’s beat estimates in recent earnings reports giving the retail sector a lift but earnings within the apparel sector look less certain with from Gap Inc (NYSE:GPS) today looking less certain after Kohl's Corporation (NYSE:KSS)’s and Urban Outfitters Inc (NASDAQ:URBN)’s missed expectations.
Futures suggest the:
S&P 500 will open 7 points lower at 2,041 with the
Dow 30 expected to open 57 points lower at 17,628 and the
NASDAQ Composite 18 points lower at 4,204.
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