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Benzinga Market Primer, Wednesday, December 12: FOMC Edition

Posted
12/12/2012 6:19:00 AM
By: Benzinga
Referenced Stocks:EWI;EWP;RBA;SPY;VGK

Futures Rise Ahead of Fed

U.S. equity futures rose in pre-market trading ahead of the FOMC rate decision. Also, Fiscal Cliff talks seem to be progressing and Democrats are willing to discuss completely rewriting the tax code, a key point of the Republican caucus. However, such a move might delay any deal into the new year.

Top News

In other news around the markets:

Asian Markets

Asian shares were higher in overnight trade ahead of the FOMC despite the North Korean rocket and satellite launch. The Japanese Nikkei Index rose 0.59 percent while the Shanghai Composite Index gained 0.39 percent and the Hang Seng Index rose 0.8 percent. In addition, the Korean Kospi rose 0.55 percent and Australian shares gained 0.17 percent.

European Markets

European shares were mostly higher in early trade, rising on hopes of further easing from the FOMC and tighter spreads of peripheral bonds. The Spanish Ibex Index rose 0.38 percent and the Italian MIB Index gained 0.25 percent. Meanwhile, the German DAX rallied 0.22 percent and the French CAC fell 0.12 percent while U.K. shares rose 0.23 percent.

Commodities

Commodities were higher ahead of the FOMC decision and also on general risk-on sentiment in markets. WTI Crude futures rose 0.43 percent to $86.16 per barrel and Brent Crude futures rose 0.58 percent to $108.64 per barrel. Copper futures gained 0.49 percent to $370.45 on hopes that the Aussie dollar would weaken, boosting Australian exports of Dr. Copper. Gold was higher and silver futures rose 0.48 percent to $33.18 per ounce.

Currencies

Currency markets were in clear risk-on mode as investors sold the dollar and the yen and bought riskier currencies. The EUR/USD was higher at 1.3024 and the dollar rose against the yen to 82.85, the highest since April. Overall, the Dollar Index fell 0.09 percent with notable weakness seen against the euro, the Swiss franc and the Swedish krone. The AUD/USD was also higher despite the Goldman call, rising 0.11 percent to 1.0540. One of the biggest movers was the EUR/JPY, which gained 0.56 percent to 107.92.

Pre-Market Movers

Stocks moving in the pre-market included:

Earnings

Notable companies expected to report earnings Wednesday include:

Economics

On the economics calendar Wednesday, MBA Purchase Applications are due out and import and export prices will shed further light on Tuesday's trade data. However, all eyes will be on the FOMC decision released at 2:30 pm and the ensuing updated economic forecasts and press conference. Many economists are calling for the Fed to roll the purchases of the ending Operation Twist into QE3, thus increasing the size of the latter program. In addition, economists have been speculating that the Fed will abandon its target date guidance and adopt an indicator-based methodology, setting policy goals to line up with improvement in key economic indicators such as the unemployment rate.

Good luck and good trading.

(c) 2012 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.