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The Wednesday Market Minute

  • Global stocks steady after solid Apple earnings sooth investors worried about slowing China growth.
  • Markets unwilling to reach for risk ahead of today's Federal Reserve rate decision, with dollar index hovering at a two-week low and Treasury bonds yields falling in the face of slowing growth and inflation forecasts.
  • U.S.-China trade talks kick-off in Washington as Apple CEO Tim Cook says he's "optimistic' that tensions have cooled over the past month.
  • U.S. equity futures suggest modest gains at the start of trading on Wall Street, with the Dow called 45 points higher ahead of earnings from Boeing, McDonald's and AT&T.

Market Snapshot

Global stocks steadied in overnight trading Wednesday as Apple Inc.'s (AAPL) solid quarterly earnings sent waves of relief through world markets rattled by persistent concerns from U.S. companies over slowing growth in China.

With Apple guiding to a relatively strong March quarter -- traditionally its weakest of the four -- and CEO Tim Cook commenting that U.S.-China trade tensions appear to be cooling ahead of a key two-day summit in Washington, investors look to have cleared a major earnings season hurdle as they head into today's interest rate decision from the U.S. Federal Reserve and a Friday reading on domestic employment that could complicate assumptions for growth and inflation in the world's biggest economy.

China's Vice Premier, Liu He, arrives in Washington today for a two-day summit on trade that could unlock months of disagreement over issues such as intellectual property protection and forced technology transfers that have stalled negotiations for several months. 

Cook, who is in regular contact with President Donald Trump, told CNBC television that there is "a bit more optimism in the air in January", with respect to U.S.-China trade relations, adding that he was "encouraged by the comments coming out of both countries".

The soothing outlook helped shares in Asia for most of the session, with the region wide MSCI ex-Japan benchmark rising 0.43% while the Nikkei 225 in Japan slipped 0.52% to close at 20,566.54.

U.S. equity futures were similarly cautious ahead of today's Fed decision and a host of blue-chip corporate earnings, with contracts tied to the Dow Jones Industrial Average indicating an 82 point gain and those linked to the S&P 500 suggesting a 6.7 point bump for the broader benchmark.

The Fed's rate decision, set for 2:00 pm eastern time, will likely keep markets range-bound for much of the session, as investors await comments from Chairman Jerome Powell for an indication that the central bank is prepared to water-down its signalling of at least two interest rate increases this year.

However, with Dow components AT&T (T) , as well as McDonald (MCD) and Boeing BA reporting before the bell, and Facebook (FB) , Tesla (TSLA) and Microsoft (MSFT) updating investors at the close of trading, the potential for big market swings remains significant. 

Apple shares were marked 5.28% higher in pre-market trading Wednesday, indicating an opening bell price of $162.85 each, the highest since December 18 and a move that would take the stock some 14.35% higher than its January 2 close, when Apple first revealed its quarterly downgrade.

In fact, with this morning's pre-market gains, Apple has added around $100 million to its market value since hitting a January 3 low of $674.75 billion.

European stocks were largely unchanged at the start of trading Thursday, despite a host of bluechip earnings from the likes of Siemens, Novartis and Telenor, with the Stoxx 600 index edging modestly higher while benchmarks in Germany and France hovered close to Tuesday's closing levels. 

Britain's FTSE 100 was the outlying market, rising 0.9% at the start of trading in London as the pound eased to 1.3068 against the dollar following a series of complicated Parliamentary proceedings late Tuesday that culminated in a vote that will force Prime Minister Theresa May to go back to Brussels and seek changes to her Withdrawl Agreement on Brexit - something EU lawmakers said immediately after the vote was impossible.

Heading into the Fed decision, the U.S. dollar index remains wedded to a two-week low against a basket of six global currencies as rate hike bets fade in the wake of weakening growth signals from the world economy and dovish tilts from central banks in Europe and Japan.

U.S. Treasury bond yields are also trading lower in the early European session, following stronger-than-expected demand for the $113 billion bonds put up for sale this week as part of the Treasury's regular funding cycle, with benchmark 10-year notes pegged 2 basis points lower at 2.71%.

Global oil prices were also steady in the overnight session, with little change for either Brent or WTI benchmarks ahead of today's private sector reading of U.S. domestic crude stockpiles from the American Petroleum Institute.

Brent crude contracts for March delivery, the global benchmark, were marked 21 cents higher from their Tuesday close in New York and changing hands at $61.53 per barrel while WTI contracts for the same month were seen 13 cents higher at $53.44 per barrel.