US pre-open: Stocks to rise after mid-terms; focus shifts to Fed announcement
US stocks looked set for gains at the open on Wednesday as investors digested an in-line outcome from the mid-term elections.
At 1215 GMT, Dow Jones Industrial Average and S&P 500 futures were up 0.7% and 0.8%, respectively, while Nasdaq futures were 1.1% firmer.
The mid-term election results in the US saw the Democrats take control of the House of Representatives while the Republicans tightened their grip on the Senate.
Oanda analyst Craig Erlam said: "The result leaves us with the prospect of political gridlock in Congress, something that is not as undesirable as you’d think. Much of Trump’s pro-growth and pro-market agenda was passed in the first two years of his term so losing control of one isn’t the end of the world. From a markets perspective, the most important thing is that the blue wave never fully materialised as this could have led to the scaling back of some of those market-friendly policies, including tax reform.
"While this was never the base case scenario, or in many people’s view, even particularly likely, it was possible and that’s enough to make investors nervous. Now we’re seeing a collective sigh of relief, which is lifting equity markets and risk appetite is gradually improving."
With the mid-terms out of the way, the focus will shift to the Federal Reserve's policy announcement on Thursday. No change to interest rates is expected but market participants will get their first insight into if and how the Fed will respond to recent volatility in financial markets.
"I don’t expect the Fed to do anything different this month and instead for now treat it as a blip in an otherwise strong market. At the very most they could reference it as something they’re monitoring but I doubt they’ll do anything that raises any question marks over a rate hike in December," said Erlam.
In corporate news, Michael Kors shares tumbled 11% in pre-market trade after the fashion brand's quarterly sales missed analysts' estimates.
Humana could be active after the health insurer's third-quarter profit surpassed estimates and the company upped its full-year outlook.
Elsewhere, Office Depot looked poised to rise at the opening bell as its third-quarter profit and sales topped expectations and the company lifted its guidance.