Here are the top five things you need to know in financial markets on Thursday, July 28:
1. Google on tap as S&P companies continue to roll out earnings
The second quarter earnings season continues in full-swing on Thursday with a slew of reports.
The reporting season thus far has been better-than-expected in general with experts easing forecasts on the drop in earnings for S&P 500 companies to just 3.0%, compared to the 4.7% decline expected ahead of the season, according to Thomson Reuters.
For Thursday’s session, the principal focus will be after the close with numbers from Google’s parent company Alphabet (NASDAQ:GOOGL) or Amazon.com (NASDAQ:AMZN).
Among other S&P components up to bat, Dow Chemical (NYSE:DOW), Colgate-Palmolive Company (NYSE:CL), Ford Motor Company (NYSE:F), Mastercard Incorporated (NYSE:MA), Hershey Company (NYSE:HSY), New York Times Company (NYSE:NYT), Harley-Davidson Inc (NYSE:HOG) or Bristol-Myers Squibb Company (NYSE:BMY) will all release quarterly numbers on Thursday.
2. Fed rate hike back off the table for 2016
Fed fund futures have taken a rate hike back off the table for this year after the Federal Reserve (Fed) made no changes to monetary policy on Wednesday.
In its monthly policy statement, the Fed said that “near-term risks to the economic outlook have diminished” and that the labor market has “strengthened”.
Yet experts suggested that markets had been looking for a stronger hint for a possible move in September and instead the U.S. central bank said “only what it had to say”.
The odds on a move in December dropped below the 50% threshold, according to Fed fund futures, only passing that mark now for the March 15, 2017 decision. According to CME Group’s FedWatch tool, the probability of a hike in September eased to 18% from the prior day’s 19.5%.
3. Gold spikes 1% to hit 2-week highs
The lack of a signal from the Fed on any move in September spiked the price of gold more than 1% higher on Thursday.
The yellow metal is sensitive to moves in U.S. interest rates. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Dollar weakness also benefitted gold on Thursday as the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, traded lower.
4. BoJ under pressure to ease monetary policy
Nerves were on edge ahead of the Bank of Japan’s (BoJ) monetary policy meeting with the decision to be released after the U.S. market close.
Referring to the recent announcement of a 28 trillion yen ($267 billion) stimulus package on Wednesday by Japanese Prime Minister Shinzo Abe, the country’s minister of economy Nobuteru Ishihara stated that the BoJ would take it into account “make an appropriate decision”.
However, some observers suggested that Abe’s package was watered down with only 7 trillion yen in direct fiscal spending and that the BoJ would be hesitant to act with further asset purchases due to rising risks.
5. Global stocks mixed post-Fed and ahead of BoJ
Asian stocks were mostly lower on Thursday despite a more positive outlook from the Fed on the American economy as investors worried that the BoJ may not ease monetary policy as much as hoped.
European stock markets were also mostly lower on Thursday while digesting the Fed statement and a slew of earnings reports.
U.S. futures however pointed to a slightly higher open on Thursday after Friday’s mixed close as the S&P showed hesitation within less than 10 points of all-time highs. At 9:53AM GMT, or 5:53AM ET, the blue-chip Dow futures gained 27 points, or 0.15%, S&P 500 futures rose 4 points, or 0.17%, and the Nasdaq 100 futures traded up 5 points, or 0.11%.