The Federal Reserve is all but certain to deliver what would be its third straight rate cut, futures are edging higher, and Honda and Nissan are reportedly exploring a merger.
1. Fed set to deliver rate cut
The Federal Reserve concludes its final policy meeting of the year later Wednesday, with a 25-basis point rate cut almost fully priced in by markets.
With a rate cut already baked in investors are instead focusing on the Fed's economic projections and comments from Chair Jerome Powell, for any insights on how aggressive the U.S. central bank may be in cutting rates in 2025.
Goldman Sachs expects the Fed to stand pat in January against earlier expectations for a cut, after unemployment has undershot and inflation has overshot the FOMC’s projections.
Analysts at Standard Chartered expect the Fed to follow up with another rate cut in January amid ongoing softness in the labor market.
"Our baseline forecast is that it cuts again on 29 January, because we expect the incoming labour market data to soften further," the bank said, in a recent note.
2. Futures edge higher
US stock futures edged higher on Wednesday, as investors braced for the final Fed rate decision of the year.
By 03:53 ET (08:53 GMT), the Dow futures contract was up 69 points, or 0.1%, S&P 500 futures were up 4 points, or 0.1%, and Nasdaq 100 futures rose 23 points, or 0.1%.
The main Wall Street indices ended lower on Tuesday with the Dow down for a ninth straight session, as investors stayed on the sidelines ahead of the Fed decision.
Data on Tuesday showed that retail sales rose more than expected in November, indicating that consumer spending, a major driver of economic growth, remains solid.
3. Oil mixed as Fed awaited
Oil prices were mixed on Wednesday as energy traders awaited the Fed rate decision and weighed the potential supply impact of tighter sanctions on Russia.
The European Union on Tuesday adopted a fresh package of sanctions against Russia over its invasion of Ukraine, targeting its shadow fleet used for transporting crude or petroleum products. Britain also sanctioned ships carrying illicit Russian oil.
By 04:05 ET, crude oil WTI futures were up 0.2% to trade at $70.25 a barrel, while the Brent contract was up 0.5% to $73.70 a barrel.
The Fed is widely expected to cut interest rates for the third time since its policy easing cycle began. Lower rates decrease borrowing costs, which can boost economic growth and demand for oil.
4. Honda, {0|Nissan}} explore merger, Foxconn also interested in stake
Taiwanese electronics giant Foxconn (SS:601138) has approached Japanese automaker Nissan (TYO:7201) with a proposal to acquire a controlling stake, according to Bloomberg.
The move underscores Foxconn's ambition to become a major player in the global electric vehicle market.
While the company has been investing heavily in its own EV business, Foxtron Vehicle Technologies, an acquisition of Nissan would provide immediate access to existing models and a global sales network.
The news comes amid reports that Nissan and Honda (TYO:7267) are also in talks about a possible merger as the automakers grapple with challenges in the EV industry, particularly from China.
5. Profit taking hits Bitcoin ahead of Fed
Bitcoin slipped on Wednesday after hitting a fresh record high, as the digital currency saw profit-taking ahead of an expected Fed rate cut.
Bitcoin fell 3% to $104,046.0 by 03:53 ET (08:53 GMT), after breaching the $108,000 level a day earlier.
The world’s largest cryptocurrency hit an all-time high of $108,244 on Tuesday buoyed by hopes for a more pro crypto environment under incoming President Donald Trump who has raised the prospect of a Strategic Bitcoin Reserve.
