US pre-open: Stocks seen touch higher as investors eye start of Fed meeting

US futures pointed to a slightly firmer open on Wall Street on Tuesday, with tech stocks set to claw back some of their recent heavy losses as investors eyed the start of the Federal Reserve's two-day policy meeting.

At 1155 BST, Dow Jones Industrial Average futures were up 0.1%, while S&P 500 and Nasdaq futures were up 0.2%. US equity markets closed lower on Monday but tech stocks - which have rallied sharply in the last 12 months - managed to finish off their lows, having taken a battering at the end of last week.

Spreadex analyst Connor Campbell said: "Looking to this afternoon and the US markets are likely going to be caught between anticipation for tomorrow’s potentially rate-hiking Fed meeting, and the tech sector-slide that began last Friday and bled into Monday. The Dow Jones isn’t too fussed at the moment, the futures promising a 0.1% increase after the bell; another round of losses from Apple and Alphabet, however, may change its mind."

The Fed will announce its rate decision on Wednesday, with an interest rate hike largely priced in.

FXTM chief market strategist Hussein Sayed said: "Traders are expecting a 100% chance of a rate increase according to CME’s Fedwatch tool, so another 25-basis points hike seems a done deal, but whether the US dollar moves higher or lower after the announcement on Wednesday depends on a couple of factors.

"The dots on the dot plot are unlikely to change much. The previous chart showed two more rate hikes in 2017, with nothing significant occurring to alter this view. We’ll be left deciphering Janet Yellen’s tone to determine whether a rate hike will be considered a dovish or hawkish hike. Another key element that’s expected to move the U.S. dollar is any signs of when and how the Fed will start reducing the $4.5 trillion balance sheet. Selling assets on its balance sheet will provide a much stronger signal than just choosing not to reinvest the proceeds of treasuries and mortgage-backed securities."

The dollar was 0.5% weaker versus the pound ahead of the open of US markets, as sterling popped above 1.2700 after the latest data from the Office for National Statistics showed UK inflation surged faster than expected to a new four-year high in May.

On the data front, the producer price index is at 1330 BST.