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Dow Jones Futures Rise 345 Pts; Ukraine Talks, Fed Meeting in Focus


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By Peter Nurse — U.S. stocks are seen opening higher Monday as Russia-Ukraine diplomatic talks resume, but investors remain wary ahead of the eagerly-awaited Federal Reserve policy meeting.

At 7 AM ET (1200 GMT), the Dow Futures contract was up 345 points, or 1.1%, S&P 500 Futures traded 38 points, or 0.9%, higher and Nasdaq 100 Futures climbed 80 points, or 0.6%.

The fourth round of talks between Ukraine and Russia are taking place Monday amid raised, albeit tentative, hopes that progress towards a ceasefire can be made. This follows comments from U.S. Deputy Secretary of State Wendy R. Sherman on Sunday that Russia was showing signs it might be willing to seriously engage in talks.

The blue chip Dow Jones Industrial Average fell 2% last week, its fifth negative week in a row, while the S&P 500 and the Nasdaq Composite dropped 2.9% and 3.5% last week. These indices have dipped into correction territory, all more than 10% below their all-time highs.

The S&P 500 Index will end 2022 about 1% lower, said Goldman Sachs, in a note, trimming its year-end target for the benchmark index to 4,700 from 4,900, citing the surge in commodity prices on the back of the conflict in Ukraine.

Aside from the events in Eastern Europe, the main focus this week will be on Wednesday’s Federal Reserve policy meeting.

The U.S. central bank is widely expected to lift interest rates by 25 basis points, its first hike since 2018. This is likely to be the start of a series of interest rate increases, with inflation rising last week to 7.9%, a 40-year high and far above the Fed’s 2% target.

Also of interest will be comments from Fed Chairman Jerome Powell following the decision, given the uncertainty surrounding the economic outlook as the Ukraine-Russia conflict exacerbates global supply disruptions.

U.S. and China are set to hold their first high-level, in-person talks since Russia’s invasion later Monday after U.S. officials over the weekend said Moscow had asked Beijing for military ​equipment in the early stages of the war.

Also prompting further caution was the news of surging Covid cases in China, with the mainland reporting the highest daily figure in two years on Sunday, prompting the lockdown of the city of Shenzhen, the country’s main tech hub.

In corporate news, Tencent (HK:0700) Holdings (OTC:TCEHY) is likely to be in the spotlight after the Wall Street Journal reported that the Chinese tech giant faces a potential record fine for violations of central bank regulations by its WeChat Pay mobile network.

The Chinese tech sector as a whole traded sharply lower Monday amid fears a number of companies will be delisted from New York for not meeting auditing requirements.

Oil prices weakened Monday, extending last week’s decline on hopes for progress in the diplomatic efforts to end the Ukraine war as well as the Chinese Covid lockdown. 

By 7 AM ET, U.S. crude futures traded 4.9% lower at $104.03 a barrel, while the Brent contract fell 3.9% to $108.28. 

Additionally, gold futures fell 1% to $1,965.30/oz, while EUR/USD traded 0.5% higher at 1.0964.

Dow Jones Futures Rise 345 Pts; Ukraine Talks, Fed Meeting in Focus

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