US pre-open: Stocks seen steady after hawkish Fed; retail sales eyed

US futures pointed to a steady open on Wall Street on Thursday following losses in the previous session after a hawkish update from the Federal Reserve

At 1215 BST, Dow Jones Industrial Average, S&P 500 and Nasdaq futures were all flat.

Investors were still digesting a 25 basis points rate hike from the Fed on Wednesday. The increase, which was the second this year, was as expected. The central bank also upgraded its forecasts for this year and the next and said it expects to deliver another two rate hikes this year and another three next year. Markets had been pricing in three moves on rates this year.

Chris Beauchamp, chief market analyst at IG, said: "Four rate hikes for 2018 does not necessarily suggest that the end of the great bull market is at hand, but it has been enough to knock equities back this morning. After years of stasis in central banks, the developments are coming positively thick and fast. Jerome Powell’s Fed is clearly happy with the situation, feeling confident enough to knock the pace up a notch, and later today we will see if the ECB are in the mood to make a few changes too."

The European Central Bank's rate decision is due at 1245 BST, with market participants expecting the bank to stand pat on rates but announce the tapering of its quantitative easing programme.

Oanda analyst Craig Erlam said: "While I don’t expect the central bank to commit to anything yet - be it a short extension and reduction or anything else - they may hint at discussions that have been had and the options that are on the table. Naturally, there’ll be plenty of questions in the press conference after on its plans beyond QE but I expect President Mario Draghi to keep his cards relatively close to his chest."

In corporate news, 21st Century Fox was likely to gain at the open after Comcast made a $65bn bid for its entertainment and international assets.

Tailored Brands was set for heavy losses, however, after its first-quarter results late on Wednesday fell short of expectations.

On the data front, retail sales figures for May are due at 1330 BST, along with initial jobless claims and the import and export price indices for May. Business inventories are at 1500 BST.

TD Securities said: "We look for retail sales to post a strong 0.5% rise in May, propped up by higher gasoline prices along with a solid 0.3% increase in the core control group (market: 0.4%, 0.4%). More favourable weather also suggests a boost from building materials and food services.

"Import prices will be released alongside retail sales and the market looks for a 0.5% m/m increase, with ex-petrol prices expected to rise 0.2%."

Initial jobless claims, meanwhile, are expected to have edged higher to 224,000 last week from 222,000.