US pre-open: Stocks seen flat as investors eye Fed minutes

US futures pointed to a flat open on Wall Street, with investors likely to err on the side of caution ahead of the latest Federal Reserve minutes.

At 1105 BST, Dow Jones Industrial Average, S&P 500 and Nasdaq futures were all unchanged.

In Europe, the main indices were a little lower, while stocks in Asia ended in the red amid growing expectations of a Fed rate hike.

At the same time, oil prices reversed earlier gains, with West Texas Intermediate down 0.3% to $48.16 a barrel and Brent crude down 0.4% to $49.08.

“Today’s FOMC minutes may offer more clues about the likelihood of a summer rate hike, after increased speculation in recent days about a possible June rate move,” said Societe Generale.

The bank pointed out that Fed officials appear to be leaning more heavily against the ultra-dovish rate path implied by the market.

“Last week, Eric Rosengren, a current voter, said that market remains too pessimistic about the US economy. Yesterday, Fed Presidents Williams and Lockhart remarked that two to three hikes for this year are appropriate and Kaplan said that rate hikes are appropriate in the not-too-distant future.”

SocGen argued that a rate hike in June was unlikely but said the Fed may be starting to make preparations for an eventual hike, perhaps by returning to a balance risk assessment in the June FOMC statement.

“Today’s FOMC minutes may offer more clues about the likelihood of a hike in July or September. Importantly, the Fed’s ability to deliver will hinge heavily on the market’s reaction to the more hawkish rhetoric and we assume that the path will be rocky,” said the bank, which expects only one hike this year, in December.

On the corporate front, FedEx shares were likely to be in focus after the company said its planned takeover of TNT Express should settle on 25 May.

Target, Lowe’s and Staples were among the companies slated to report earnings on Wednesday.

In currencies, the dollar was 0.3% firmer against the pound and the yen, and 0.4% stronger versus the euro.