Wall Street is seen bouncing Thursday after the previous session's Fed-led rout, with the Bank of England the next central bank in the line to provide policy decisions. Apple is linked with Chinese partners for its AI options, while Micron disappoints with its guidance.
1. BOE is next central bank in line
The central bank parade continues Thursday, the day after the Federal Reserve cut interest rates but projected a slower pace of monetary easing in 2025.
The Bank of England is next up, later in the session, and, unlike the Fed, is expected to keep interest rates unchanged, adopting a very gradual stance to easing the country’s monetary conditions.
UK consumer price inflation climbed to 2.6% in November from 2.3% the prior month, according to data released earlier this week, surging further away from the Bank of England’s 2.0% medium-term target.
Additionally, British pay rose more than expected in the three months to October, raising worries over underlying inflation pressures.
Fifty basis points of cuts from the BOE are priced in to 2025, with the first 25 bp cut fully priced for May. That could shift if policymakers sound particularly hawkish after the announcement.
Thursday also brings central bank meetings in Norway and Sweden.
Norway's central bank is expected to keep rates unchanged, while Sweden's equivalent is likely to cut its key rate by a quarter point.
The Bank of Japan kept interest rates unchanged earlier Thursday, with its benchmark short-term policy rate staying at 0.25%, as policymakers remained cautious over Japan’s economic outlook and the path of inflation.
The BOJ said it expects consumer price index inflation to pick up in 2025, amid a virtuous cycle of higher wages and increased private consumption.
The People’s Bank of China meets on Friday, and is also widely expected to leave its benchmark lending rates unchanged.
2. Futures bounce after tech-led rout; GDP data due
US stock futures edged higher Thursday, bouncing after the previous session’s sharp selloff in the wake of the Federal Reserve’s revised outlook for interest rates next year.
By 04:40 ET (08:40 GMT), the Dow futures contract was up 155 points, or 0.4%, S&P 500 futures climbed 20 points, or 0.4%, and Nasdaq 100 futures rose by 85 points, or 0.4%.
The main Wall Street indices slumped on Wednesday after the US central bank cut interest rates, but also signaled that it was likely to only cut interest rates twice next year, down from the four reductions seen in September’s forecast.
The blue chip Dow Jones Industrial Average fell over 1,000 points, or 2.6%, its 10th straight loss, while the S&P 500 dropped almost 3% and the Nasdaq Composite slipped 3.6%, its worst day since late July.
Still this rout in technology stocks presents a buying opportunity, Wedbush analysts said, with artificial intelligence set to drive more gains in the coming year.
The selloff presents a “buying opportunity to own tech winners poised to play in a robust AI Revolution into 2025,” Wedbusg said, in a note released late Wednesday.
The economic data slate centers around the third-quarter GDP release, which is expected to show that annualized growth fell to 2.8% in the quarter, a drop from 3.0% the previous quarter.
3. Apple looks to partner China partners over AI
Apple (NASDAQ:AAPL) is in talks with local partners, Tencent and ByteDance, about integrating their artificial intelligence models into iPhones sold in China, Reuters reported, a key market for the tech giant.
Apple started the rollout of OpenAI's ChatGPT into its devices this month, but China’s regulatory requirements mandate that generative AI services obtain government approval before public release, forcing Apple to seek local partners for its AI features.
Apple's discussions with Tencent and TikTok owner ByteDance on using their AI models are at a very early stage, Reuters said, but look likely to be part of the US company’s plans to increase revenue when its market share in the second largest economy is declining.
4. Micron’s guidance disappoints
Micron (NASDAQ:MU) stock slumped premarket after the chipmaker issued weak second-quarter guidance after the close Wednesday, disappointing investors despite an earnings beat for the latest period.
The company reported first-quarter earnings ahead of expectations, but it also significantly reduced its outlook for the first quarter of next year amid sluggish demand for the chips it makes, which are used for personal computers and smartphones.
Micron’s shares are up over 20% so far this year, but are indicated to trade over 16% lower Thursday, with its guidance suggesting that although enthusiasm for artificial intelligence remains strong, outside of this semiconductor sales are struggling.
5. Oil slips on hawkish Fed
Crude prices fell Thursday, weighed by demand concerns after the Federal Reserve turned more hawkish, potentially stifling growth in the world’s largest consumer.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.
By 03:40 ET, the US crude futures (WTI) dropped 1.4% to $69.62 a barrel, while the Brent contract fell 0.5% to $73.00 a barrel.
Traders feared that global economic growth will cool under relatively higher rates, limiting demand, in the wake of the Federal Reserve’s meeting.
The US dollar also soared, climbing to an over two-year high, which pressures the oil complex by making the commodity more expensive for international buyers.
Additionally, official data from the Energy Information Administration on Wednesday showed US crude stocks fell by 934,000 barrels in the week to Dec. 13, compared with expectations for a 1.6 million-barrel draw.
