US stock futures advance as markets brace for tech earnings, Fed meeting

July 25, 2023 (MLN): U.S. equity futures edged higher in cautious trade Tuesday, hemmed in by risks including upcoming earnings from technology mega caps and this week’s Federal Reserve meeting, Bloomberg reported.

Contracts on the Nasdaq 100 index gained as much as 0.4%, after a weak session Monday, with Microsoft Corp. and Alphabet Inc. due to report their first earnings since artificial-intelligence fever broke out.

Shares in both companies were about 0.5% higher in New York pre-market trading as investors waited to see if the results justify the companies’ hefty year-to-date share gains.

However, investors appear unwilling to place big bets, given uncertainty over what signals Federal Reserve and European Central Bank policymakers might send, with the Fed’s potential policy path, especially, crucial for global markets.

“Investors are unlikely to feel safe enough to get into the equities water before such an eventful week,” Mizuho International Plc strategists Evelyne Gomez-Liechti and Helen Rodriguez wrote in a note.

Overall, S&P companies with a market value of $16.3 trillion are reporting earnings this week. Shares in General Motors Co. and General Electric gained in premarket trading as both companies raised their earnings guidance, while NXP Semiconductors NV advanced as its results beat expectations.

European shares also edged higher, lifted by resources firms such as Anglo American Plc and Rio Tinto Plc that benefited from Chinese authorities’ latest stimulus pledge.

Among individual movers, consumer-goods giant Unilever Plc stood out, gaining as much as 5.6% after beating sales estimates, while spirits group Remy Cointreau SA surged after Chinese sales helped it surpass forecasts.

European market sentiment was dampened by a euro-area bank lending survey which showed a record plunge in loan demand from the bloc’s companies.

Alongside a dismal business outlook reading from Germany, the data raise questions over the ECB’s capacity to hike interest rates much beyond the 25 basis points priced for this Thursday’s meeting.

In the US, however, hopes have grown that the economy will be able to escape a sharp recession. That’s lifted the Dow Jones Industrial Average 5% so far this month, as investors price a better outlook for companies making industrial equipment and heavy machinery.

That’s put the Dow index in the midst of its longest winning streak in more than six years.

Commodity prices were mostly on the rise after Chinese leaders used this week’s Politburo meeting to flag more aid to the economy.

Oil prices held near three-month highs, while copper and steel-making staple iron ore both rose, given their importance for China’s property sector. US-listed Chinese stocks also extended their rally in premarket trading.

Attention is now turning to LVMH, Europe’s biggest company on what it says about Chinese consumer trends in its report later in the day.

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