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Bloomberg
US stock futures pointed to a downbeat opening after European shares fell from a 20-month high as investors digested poor overnight news on Apple Inc. earnings. The dollar strengthened before a Federal Reserve meeting where policy makers will need to mull over another soft patch in the US economy.
Apple Inc. fell 1.2 percent in pre-market New York trading and suppliers to the company were among the biggest losers in the Stoxx Europe 600 Index. Dialog Semiconductor Plc dropped as much as 6.2 percent before trimming losses. Industrial metals fell, pushing down commodity producers for a third day. A bond rally in Europe was led by Portugal. Closed markets in Japan and Hong Kong curtailed trading in Treasuries, which weakened at the start of European hours.
Disappointment over Apple results managed to offset gains in the labor market. Private payrolls expanded by 177,000 in April, exceeding forecasts. The data will be among economic gauges that Federal Reserve policy makers are examining in a two-day meeting that concludes Wednesday. At the same time, the pace of Fed tightening hinges on whether President Donald Trump can meet fiscal stimulus pledges that will ignite inflation.
“The characterization of the economic outlook will shape expectations about the Fed’s ‘base case’ of two additional hikes this year,†Scotiabank’s chief currency strategist Shaun Osborne wrote in a note to clients. The base case for tightening would be supported by a statement that nods at faster growth and a healthier labor market, but one that highlights the “softer run of activity data recently may dampen the outlook for another rate hike next month,†he said.
Investors will be watching comments from a policy meeting of the Federal Open Market Committee Wednesday.