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Futures higher after Fed decision, Apple earnings ahead

Updated: Nov 15, 2023

U.S. futures point into the green, as markets examined statements from Federal Reserve Chair Jerome Powell following the central bank's decision to keep interest rates steady for a second straight meeting. Apple (NASDAQ:AAPL) gears up to unveil its latest three-month earnings, with analysts also eager for any guidance from the tech giant on trading during its crucial December quarter. Shell (LON:SHEL) bumps up its share buybacks, boosting shares in the oil group.

Futures inch higher after Fed verdict

U.S. stock futures were trading higher on Thursday, with investors digesting the Federal Reserve's decision to leave interest rates unchanged.

By 05:55 ET (09:55 GMT), the Dow futures contract had gained 102 points or 0.3%, S&P 500 futures had added 22 points or 0.5%, and Nasdaq 100 futures had risen by 107 points or 0.7%.

The U.S. central bank's Federal Open Market Committee on Wednesday voted to keep the all-important federal funds rate steady at a target range of 5.25% to 5.50%, although Chair Jerome Powell flagged that the process of bringing inflation back down to policymakers' 2% objective "has a long way to go."

After the announcement, the benchmark S&P 500 climbed by 1.1%, while the 30-stock Dow Jones Industrial Average and tech-heavy Nasdaq Composite moved up by 0.7% and 1.6%, respectively. European and Asian equities both followed Wall Street into the green, in a possible sign that global investors are becoming more confident that the Fed has finished tightening policy this year.

Elsewhere, the dollar fell against a basket of its peers, while the price of Bitcoin -- the world's largest cryptocurrency by market capital -- hit its highest mark since May 2022.

Powell vows to proceed "carefully"

The Fed's choice to keep borrowing costs at a more than two-decade high may have been widely cheered by markets weary after months of unprecedented rate hikes, but Powell noted in a closely-watched post-meeting news conference that officials are still asking themselves if more increases are warranted.

For now, he stressed that the Fed will only "proceed carefully," arguing that monetary policy is currently at a "restrictive" level.

Some eyebrows were raised by the statement, particularly in the wake of unexpectedly strong data which hinted at a surprising resilience in the U.S. economy. This trend has in turn sparked worries that a recent cooling in inflation could lose steam.

However, Powell remained confident that inflation would continue to decelerate, albeit in "lumps." In any event, the comments pointed to the delicate task before the Fed: corralling price pressures without causing deep economic malaise.

Apple earnings ahead

Attention now turns to Apple as the tech giant prepares to unveil earnings for its September quarter after the closing bell on Thursday.

For the iPhone maker's stock, 2023 has so far been a positive year. Shares have risen by just over 30% over that time, with traders comforted by the company's popular product offerings and solid cash flow.

Yet its fiscal fourth quarter sales are expected to come in $89.28 billion, which would be a fall of around 1% compared to the same period last year and the fourth straight quarterly drop.

For the December quarter, a possible downturn in demand in the firm's key Chinese market and lackluster consumer spending sentiment have been cited by analysts as looming headwinds. Indeed, analysts at Barclays have warned that Apple's guidance for its current quarter -- typically its biggest thanks to holiday season shopping -- may potentially miss Wall Street estimates.

Shell increases share buybacks

London-listed shares in Shell jumped in early trading after the oil major announced share buybacks of $3.5 billion over the next three months, up from $2.7 billion in the prior quarter.

Meanwhile, the company left its dividend at $0.331 per share despite a quarterly performance that Chief Executive Officer Wael Sawan described in a statement as "strong."

Shell's adjusted third-quarter earnings of $6.2B met company-provided market estimates, although the figure was 34% lower on an annual basis. Solid trading at its liquefied natural gas unit helped offset a drop in energy prices and a decline in production at its Integrated Gas division.

"We continue to simplify our portfolio while delivering more value with less emissions," Sawan said.

Crude ends three-day decline following Fed decision

Oil prices rebounded Thursday, snapping a three-day fall, after the Fed kept interest rates on hold, hitting the dollar and helping risk appetite return to financial markets.

By 05:55 ET, the U.S. crude futures traded 1.6% higher at $81.72 a barrel, while the Brent contract climbed 1.4% to $85.83 per barrel. Both benchmarks settled at their multi-weeks lows in the previous session, having dropped around 10% in October.

Markets largely traded past U.S. inventory data, with official data from the Energy Information Administration showing a slightly smaller-than-expected build in oil inventories over the week to October 27.

Distillate inventories declined by less than anticipated, while gasoline inventories saw an unexpected but limited build.

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