U.S. stock futures wavered ahead of the open on Wednesday as Wall Street awaits for the Federal Reserve's latest interest rate decision amid of a fast-moving banking crisis. Futures tied to the S&P 500 and futures on the Dow Jones Industrial Average ticked up near the flatline. Contracts on the technology-heavy Nasdaq Composite edged down by nearly 0.2%. U.S. government bond yields edged up. The benchmark 10-year Treasury yield increased to 3.6%, while on the front end of the yield curve, two-year yields rose 4.1%. Oil prices dipped, with WTI crude down to $69.51 a barrel. The Federal Reserve's policy-making committee, headed by Chair Jerome Powell, will take center stage Wednesday. Market expectations have skewed firmly toward a 25-basis point rate hike or no move at all. The shift has been spurred by recent turmoil in the banking sector and the European Central Bank’s decision to hike rates by 50 basis points last Thursday. Jim Reid and colleagues at Deutsche Bank believe that the “ECB’s decision last week offers a relevant blueprint for the Fed: Raise rates in line with expectations, drop forward guidance, but signal a continued tightening bias.” This move came amid calls for central banks on both sides of the Atlantic to dial back on policy tightening in light of the banking crisis. Ahead of the U.S. policy meeting, markets are pricing in an 87% probability of a 25-basis point hike by the Fed – according to the CME FedWatch Tool. The Fed releases its decision and economic projections at 2 p.m. ET, and Powell gives a statement and takes questions starting around 2:30 p.m. ET. “Powell’s challenge in the press conference will be to maintain focus on fighting inflation while signaling flexibility in how they deal with the banking crisis,” Michael Feroli, Chief U.S. Economist at JPMorgan, wrote in a note to clients. Regulators have taken pains to emphasize the banking system is stable. On Tuesday, Treasury Secretary Janet Yellen said the U.S. banking system is “sound” but additional rescue arrangements “could be warranted” if new failures pose risks to financial stability. Bank sentiment wavered on Wednesday after surging Tuesday amid Yellen's comments. Regional bank stocks including First Republic Bank, PacWest Bancorp, Western Alliance Bancorporation, and Regions Financial traded lower before the opening bell, while Zions Bancorporation was up slightly. Big bank stocks gained, as Bank of America, JPMorgan Chase, Wells Fargo and Citigroup all traded upward before the opening bell. Meanwhile, despite a $30 billion cash lifeline last week to First Republic, news reports are swirling that Wall Street executives and US officials are in talks over a new rescue plan to restore investor confidence and potentially ensure a buyer. Asian stock markets rallied on Wednesday as easing concerns over a banking crisis saw investors pile into discounted financial stocks, with focus now turning squarely to a Federal Reserve interest rate decision later in the day. Japan’s Nikkei 225 was among the best performers for the day, rising over 2% in catch-up trade as major financial stocks surged. Focus this week is also on Japanese consumer inflation data due on Friday, which is expected to factor into the Bank of Japan’s stance on monetary policy. Technology-heavy indexes surged, with Hong Kong’s Hang Seng index up 2.1%, while South Korea’s KOSPI and the Taiwan Weighted index rose 0.9% and 1.3%, respectively. Chinese stocks lagged their peers on Wednesday, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes only adding about 0.1% each. Markets were seeking more cues on an economic recovery in the country, following middling signals on a rebound. Oil prices edged lower on Wednesday following fresh indications of weak demand, and as the market awaited a crucial interest rate decision by the U.S. Federal Reserve. Brent crude futures , which have risen by almost 3% this week, were down 30 cents, or 0.40%, at $75.02 a barrel at 1026 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 29 cents, or 0.42%, at $69.38. Gold prices moved in a tight range on Wednesday, stabilizing after a sharp drop in the prior session as markets hunkered down ahead of a Federal Reserve interest rate decision, while easing fears of a banking crisis spelled lesser safe haven demand for the yellow metal. Spot gold was flat at $1,940.80 an ounce, while gold futures rose 0.4% to $1,944.10 an ounce by 22:09 ET (02:09 GMT). Both instruments sank nearly 2% each on Tuesday, pulling back sharply from a one-year high.
Roodeweg 222, Willemstad, Curaçao