US open: Markets up as investors await Federal Reserve decision

Markets opened marginally up on Wednesday, as investors awaited a statement by the Federal Reserve which is expected to shed light on when the US central bank plans to begin lifting interest rates.

Consumer prices in the US dropped for the first time in over a year and remained short of the Federal Reserve’s 2% target.

Figures released by the Labor Department on Wednesday showed that the consumer price index declined 0.2%, the first time it had receded since April 2013, surprising analysts who had predicted the index would remain unchanged.

A stagnant global growth and a dip in energy costs helped contain inflation, while dim price increases have allowed the Federal Reserve to keep interest rates at record lows.

“The fact that unemployment is lower now than at any time since late 2008 is good news. There is more to do, but it's clear that our growing economy is feeding through to new jobs,” said Neil Carberry, CBI director for employment & skills.

"Jobs growth is coming from the private sector, more than making up for public sector job losses, and more young people are finding their feet in our labour market.

"With unemployment dropping, and wage settlements in larger firms starting to pick up, we expect to see average earnings growth begin to rise in time."

According to a report released by the Commerce Department, the current account deficit narrowed down in the second quarter, shrinking 3.5% from $102.1bn to $98.5bn, going against analysts’ forecasts, which had predicted the deficit would grow to $113.4bn.

In corporate news, Auxilium Pharmaceuticals soared as high as 44% in premarket trading, after news emerged late on Tuesday night that Endo International will complete a takeover worth $28.10 per share.

DuPont rose slightly after an investor called for a breakup of the company, while FedEx rose after posting better than expected profit and sales and US Steel hiked significantly after announcing major strategic changes.

Rackspace Hosting fell as much as 18% after announcing it won’t be selling itself, while Adobe Systems fell slightly after posting quarterly results on Tuesday.

Eurozone inflation was unexpectedly revised up to 0.4% in August from the previous estimate of 0.3%, while core inflation was left unrevised at 0.9%, in line with consensus.

Meanwhile, China’s central bank announced it will inject a combined $81.3bn in the country’s top banks as authorities look to halt the slide of the Chinese economy.

The dollar was on retreat against the euro and the pound, despite the uncertainty surrounding the outcome of the Scottish independence referendum, with the latest polls showing the ‘yes’ campaign was gaining momentum ahead of the vote on Thursday.

West Texas Intermediate crude was trading down 0.3% to $94.6 a barrel, while the yield on treasury 10-year notes fell one basis point to 2.58%.