The idea that the US economy barely grew in the first quarter of 2015 has poked serious holes in consensus opinion that it is diverging away from a global slowdown. US stocks are still coming to terms with the implications of lower growth, eyeing a lower open on Thursday.
The Fed in their latest statement acknowledged the slowdown but has marked it off as transitory and expects a rebound in the second quarter. With the removal of all calendar references to the timing of the lift off from zero-bound rates, the Fed is now fully data dependent.
The weaker GDP print could still be taken as a positive for markets since it implies a later rate hike but the Fed’s latest statement didn’t really play ball with enough dovish tones to confirm it.
The next major data consideration is inflation and the Fed’s favourite measure; the core PCE deflator is released on Thursday. It is likely to remain subdued with perhaps a slight pickup thanks to secondary effects of higher oil prices in the last month. The second data consideration is jobs, making next week’s NFP report of particular importance.
Indices are unlikely to get much leadership from Apple shares (NASDAQ:AAPL) on Thursday, which could see a lower open on news that the Apple Watch shortage was perhaps because of a defect and that the company may feel material impacts from the EU tax probe.
Salesforce could be in play again after the share price spiked on takeover rumours.
Shares in Baidu Inc (NASDAQ:BIDU)are expected to open lower after the Chinese internet search company missed revenue expectations and issued weak guidance for the second quarter.
Earnings expected from Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), Colgate-Palmolive Company (NYSE:CL) and CME Group before the open on Thursday while Visa, LinkedIn, American International Group Inc (NYSE:AIG), Gilead Sciences (NASDAQ:GILD) and First Solar all report after the closing bell.
Futures suggest the:
S&P 500 will open 8 points lower at 2,098 with the
Dow Jones expected to open 86 points lower at 17,949 and the
Nasdaq 100 28 points lower at 4,460
CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.