Day Ahead: Top 3 Things to Watch

Day Ahead: Top 3 Things to Watch

Day Ahead: Top 3 Things to Watch
Stock Market
Tuesday, June 18, 2019 - 19:21

Investing.com - It’s clear that tomorrow is all about the Fed, with expectations that the FOMC won’t blink under pressure from President Donald Trump just yet, but will send all the right signals that a cut is coming.

One thing that may warrant more discussion is just how much it could cut. A standard quarter-point cut is still the prediction but there is a case to made that the FOMC could cut by 50 basis points when it does move.

The is now a 17.9% chance that rates will be a half-point lower after the July meeting, according to Investing.com’s Fed Rate Monitor. A larger-than-usual easing could give the Fed breathing room for a few more meetings (or the whole year) and also keep Trump tweets to a minimum.

Here's the top three things that could rock markets tomorrow.

1. It's Fed Day!

The Federal Reserve will wrap up its two-day meeting on Wednesday, with many expecting the central bank to stand pat on rates, but tee up a rate cut for as soon as July.

About 80% of traders expect the Fed to keep interest rates on hold in the 2.25% to 2.50% range on Wednesday. More than 85% expect a rate cut in July.

Calls for a rate cut have grown louder as the Fed's 2% inflation goal has proved elusive. As well as stuttering inflation, escalating U.S-China trade tensions, which have kept global growth on the backfoot, have also bolstered the chorus for a cut.

Fed Chairman Jerome Powell's presser will also be parsed for clues about the central bank's future monetary policy intensions.

Powell and his colleagues have made it clear that they will cut rates preemptively - ahead of a recession - to shore up confidence and offset some of the headwinds tied to an increase in tariffs, said Diane Swonk, chief economist at Grant Thornton.

2. Crude Oil to Stage Another Surprise Build?

The Energy Information Administration (EIA) petroleum report is due Wednesday, with analysts keen to see whether domestic crude stockpiles will stage an unexpected build for the third-straight week.

The EIA is expected to report a draw in crude stockpiles of 1.08 million barrels for the week ended June 14.

Crude oil futures rose 3.8% to settle at $52.90 a barrel after President Donald Trump said he and China's President Xi Jinping will have "an extended meeting" at next week's G-20 summit.

Signs of easing U.S.-China trade tensions "would be positive of course for global growth and then commodities demand and oil demand in particular," Julius Baer said.

Ahead of the EIA report, the American Petroleum Institute released data, which often serves as an early indication of weekly petroleum levels, which showed weekly crude stockpiles rose by 0.812 million barrels last week.

3. Oracle Earnings on Tap

Oracle (NYSE:ORCL) is set to release its earnings after U.S. markets close on Wednesday.

The tech company is expected to report fourth-quarter earnings of $1.07 per share on revenue of $10.95 billion in the fourth quarter, according to estimates compiled by Investing.com.

Ahead of its earnings report, Oracle has seen its shares flirt with all-time highs. But while that may indicate investor optimism, cloud computing growth will likely draw the bulk of attention as the company has been ramping up investments in cloud computing to make up for its late entry to the rapidly growing segment.

In its previous quarter, Oracle topped third-quarter profit and revenue expectations, thanks largely to growth in its cloud services and licence support unit.

Oracle, up about 17% year to date, closed just shy of its all-time high of $55.33 on Tuesday.

© Reuters.
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