US pre-open: Stocks seen muted as Fed expected to pause rate hikes

US stock futures pointed to a muted open on Wall Street on Wednesday as investors eyed the latest policy announcement from the US Federal Reserve amid expectations of a pause in rate hikes.

At 1130 BST, Dow Jones Industrial Average futures were down 0.2%, while S&P 500 and Nasdaq futures were up 0.1%.

TickMill Group said: "Expectations that the Fed will today pause its 15-month tightening program have jumped higher on the back of the latest round of US inflation figures released yesterday.

"US CPI for May was seen cooling to 4% YoY, down from the prior month’s 4.9% and below the expected 4.1% reading. In terms of monthly data, headline CPI printed 0.1%, below the 0.2% the market was looking for and below the prior month’s 0.4% while core inflation remained steady at 0.4%."

It added: "The data has seen the market move to fully price in a rate pause at the FOMC later today. USD has softened accordingly while risk assets have moved firmly higher. Equities and commodities have seen fresh demand as have risk currencies. Looking ahead to today’s meeting, the focus will be on the guidance the Fed issues and its new rate projections.

"While the Fed is likely to still signal further tightening, the outlook might be less hawkish than many were anticipating prior to yesterday’s data which, if seen, should drive USD lower near-term, allowing risk assets room to move higher."

On the macro front, the producer price index for May is due out at 1330 BST. The Fed’s rate announcement is at 1900 BST.

In corporate news, Tesla was likely to be focus after the electric car maker lifted the price of its Model Y in the US again.