S&P 500 futures are gaining ground in premarket trading while traders prepare to hear the comments of Fed Chair Jerome Powell, who will speak soon after the Fed releases its Interest Rate Decision.
The rate will stay unchanged, and traders will focus on signals regarding the fate of Fed’s asset purchase program. Most likely, Powell will not announce the reduction of the asset purchase program, but he will likely start to prepare markets for this inevitable move.
In case Powell is less dovish than expected, stocks may find themselves under pressure, although it should be noted that Powell has been consistently successful when he was trying to calm markets.
Today, traders will also take a look at Existing Home Sales report which is projected to show that Existing Home Sales declined by 1.3% month-over-month in August. Most likely, the market will ignore this report and wait for Fed’s decision and Powell’s press conference.
China’s Evergrande Is Reportedly Ready To Make A Coupon Payment
According to recent reports, China’s developer Evergrande is expected to make a bond coupon payment on Thursday. This news has already provided support to global markets which were worried about potential financial contagion in case of Evergrande’s default.
It is too early to tell whether Evergrande will be able to solve its problems, and default remains a major risk. However, markets have already heard the news they wanted to hear, and are now focused on the Fed.
WTI Oil Moves Back Above $71 As Crude Inventories Decline
WTI oil gained additional upside momentum after API Crude Oil Stock Change report indicated that crude inventories declined by 6.1 million barrels. Analysts expected that crude inventories would decline by just 2.4 million barrels.
Today, oil traders will focus on EIA Weekly Petroleum Status Report which may confirm API data on crude inventories and also provide an update on the current U.S. domestic oil production.