World markets are trading lower this morning as investors respond to more earnings reports and await today’s Fed monetary policy decision. Ahead of the meeting, the US dollar is trading higher against other majors, climbing 0.4% against the Euro, 0.5% against the Canadian Dollar and 0.6% against gold. Other metals are under pressure today with silver falling 1.7% and copper dropping 1.1%.
Market action suggests that investors are not expecting any new stimulus from the FOMC today. Investors may look to comments in the statement or the press conference related to current and projected economic conditions, any hints on whether additional stimulus is under consideration, and any thoughts on how the central bank plans to work with the incoming administration, particularly since the new Treasury Secretary, Janet Yellen, was current Chair Powell’s predecessor.
US index futures are down 0.75% to 1.00% this morning, with Dow futures down nearly 300 points, continuing overseas markets’ downward course which has seen the Dax drop 1,8%, the FTSE fall 1.3% and the Hang Seng slip 0.3%. Weaker than expected US durable goods orders for December (0.2% vs street 0.9% and previous 1.2) aren’t helping the bulls cause.
Another flurry of earnings reports have come out overnight and this morning. Canadian National Railway beat expectations on earnings ($1.43 vs street $1.41) and raised its dividend by 7%. Management indicated that a sharp drop in petroleum related revenue was offset by growth in lumber, potash and consumer goods volumes.
Highlights of today’s US earnings reports include: Microsoft ($2.03 vs street $1.64), Starbucks ($0.61 vs street $0.55), Texas Instruments ($1.64 vs street $1.34), Advanced Micro Devices ($0.52 vs street $0.47) and Boeing (sales $15.3B vs street $15.0B, earnings distorted by large charges against the 737 ad 777 programs due to groundings, and falling demand for air travel). After the close today, results are due from Apple, Facebook, and Tesla.