There have been a number of geopolitical headwinds confronting US stocks as Greece disagreed on extending its bailout program, the Ukraine ceasefire was violated and growth in Japan disappointed in the fourth quarter.
Nonetheless markets were relatively steady and it proved to be oil prices that were at the heart of US stock market trading. Oil dropped early on as concerns mounted over expectations of another high inventory number released this week but the dip was used as a buying opportunity leaving prices higher on the day.
Stock markets followed a similar pattern to oil prices, down early on but later boosted by reports that the Greek government will ask for a six-month extension of its bailout program.
US treasuries sold-off on Tuesday in the belief that today’s FOMC minutes will reiterate the hawkishness of the last statement. A move out of safe havens including treasuries, gold and silver and the Japanese yen underpinned stocks.
So long as the Fed minutes continue to imply that the Fed will look past the low levels of headline inflation as transitory, expectations should be maintained for a mid-year rate hike. The minutes may risk sounding more dovish if slack in the labour market or the strong US Dollar are highlighted as big concerns in the face of strong jobs numbers.
With the S&P 500 having made a new closing high above 2,100, US stocks are set to make a small technical correction at the open of Wednesday’s trading session ahead of the release of the Fed minutes.
Virgin America, Garmin, Marriott International, Hyatt Hotels and Marathon Oil all report earnings on Wednesday.
Futures suggest the:
S&P 500 will open 3 points lower at 2,097 with the
Dow Jones expected to open 20 points lower at 18,027 and the
NASDAQ 3 points lower at 4,382.
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