Global stocks steadied Wednesday, with U.S. equity futures little-changed from their last close, as investors prepare for the first interest rate decision from Federal Reserve Chairman Jerome Powell and survey the wreckage in the tech sector following Facebook Inc's (FB) - Get Report two-day, $50 billion meltdown.
Futures contracts tied to the Dow Jones Industrial Average were marked 28 points lower from their Tuesday close, implying a modest 4 point gain at the opening bell, while those tied to the broader S&P 500 were seen 2.75 points, or 0.1%, to the downside following a quiet session in Asia and little early-hours movement during European trading as investors keep a close eye on developments in bond and currency markets ahead of today's rate decision from the Fed in Washington.
Tech stocks are also likely to be in focus again today as investors both await a proposal from the European Commission that is expected to recommend a blanket 3% tax on revenues of the larger U.S. technology firms -- those with worldwide sales of more than €750 million ($920 million) -- and continue to assess the fallout from the data scandal that has lopped more than 9% from Facebook's share price over the past two sessions and reduced the social media group's market value by $50 billion.
Facebook shares were marked 2.05% lower from their Tuesday close in pre-market trading in New York, indicating an opening bell price of $164.70, the lowest since Sept. 26 and a move that would their its three-day decline past 11%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, slipped around 0.20% from a three-week high to trade at 90.15 Wednesday, even as investors took benchmark 10-year U.S. Treasury yields to 2.89% in anticipation of the first hike under the tenure of new Chairman Powell and the expected signalling of three more hikes before the end of the year.
The CME Group's FedWatch tool, however, suggests investors are split as to whether Powell can execute four hikes this year and take the Fed Funds rate to between 2.25% and 2.5% by the end of the year, with a 40% probability of rates topping out just below that mark and a 30% chance of a fourth rate hike before the end of the year.
That split is no surprise, given the mixed signals we're seeing in the U.S. economy, where 313,000 new jobs were created last month, the unemployment sits at a 17-year low of 4.1% and consumer confidence in running at a 14-year high. However, retail sales have fallen for the third consecutive month in February and despite the robust jobs market, average hourly earnings are only growing at 2.6%, a pace that is only modestly faster than headline inflation, which is running at around 2.2%, according to the Labor Department's latest reading.
In Europe, the Stoxx 600 index slipped 0.18% in the two hours of trading, while benchmarks around the region were largely mixed, with Germany's DAX performance index falling 0.27% and Britain's FTSE 100 falling 0.8% thanks in part to a stronger pound sterling, which leapt to 1.4068 against the dollar after much stronger-than-expected wage data for the month of February.
Overnight in Asia, stocks were largely quiet, owing to a national holiday in Japan that kept markets closed for the session and emptied liquidity from benchmarks around the region. The MSCI Asia ex-Japan index was marked 0.16% to the downside heading into the close of trading, led by a 0.43% fall for the Hang Seng index in Hong Kong and a 0.29% slide for the Shanghai Composite.
Global oil markets were active, however, with traders extending recent gains amid speculation that the United States may reimpose sanctions on Iran in the coming months in a move that could trim that country's crude exports by as many as 500,000 barrels by the end of the year.
Brent crude contracts for May delivery, the global benchmark, were seen 0.62% higher from their Tuesday close at $67.90 each while WTI contracts for the same month, which are more closely linked to U.S. prices, were marked 0.88% higher at $63.96 as investors await official data on domestic crude stocks later today from the Energy Information Administration.