US pre-open: Stocks set for another negative session

US futures pointed to a downbeat start on Wall Street, which was set for its sixth straight session of losses.

At 1120 BST, Dow Jones Industrial Average and S&P 500 futures were down 0.3% while Nasdaq futures were 0.4% lower.

At the same time, oil prices were in the red. West Texas Intermediate was down 1.3% to $47.38 a barrel while Brent crude was 1.2% weaker at $48.33.

“US stocks look set for a lower open, extending the downturn that happened in the last hours of trading yesterday following the Fed decision,” said CMC Markets’ Jasper Lawler.

“The Fed’s belief that ‘gradual increases in the federal funds rate’ are appropriate has been overshadowed by talk of a ‘loss of momentum’ in the US labour market and a reiteration of the need to ‘proceed cautiously’. The changes in the dot plot combined with Ms Yellen’s emphasis on caution takes July off the table for a rate hike, and more than likely September too.”

On Wednesday, the US Federal Reserve left interest rates unchanged at 0.25% to 0.50%, as widely expected, with Chair Janet Yellen conceding that the upcoming UK referendum had been a factor in the decision. The central bank downgraded its economic growth forecasts and the projections of policy members showed a majority still wanted two rate hikes this year, but six of them now expect only one compared to one member in March.

Societe Generale said: “The FOMC statement and the accompanying summary of economic projections (SEP) sends a clear dovish message that the Fed is likely to remain cautious on the pace of rate hikes. While the changes to the FOMC statement were modest and in line with expectations, the real change was in the ‘dot plot’ and the committee’s expectations for the pace of rate hikes over the coming years.

“The ‘dot plot’ also indicates a sharp decline in hike expectations for the coming years, with just three hikes for 2017 and 2018 (down from four hikes in the March SEP).”

Investors were also digesting the latest policy announcement from the Bank of Japan, which left its key interest rate at -0.1% and held off from providing more stimulus, keeping its annual target for expanding the monetary base at Y80trn. The Nikkei slumped on the news, while the yen breached Y104 to the dollar.

In corporate news, Jabil Circuit was a little weaker in pre-market trade after cutting its outlook for the year late on Wednesday.

Airbnb was likely to be in focus after saying it had secured a $1bn debt facility to finance expansion plans.

On the data front, investors will eye the release of US CPI, the Philadelphia Fed survey and initial jobless claims at 1330 BST. The NAHB housing market index is at 1500 BST.