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Futures edge higher ahead of Fed meeting minutes

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U.S. stock index futures edged higher on Wednesday as hopes of an economic recovery in China lifted sentiment, while focus was also on minutes from the Federal Reserve’s December policy meeting for clues on the outlook for interest rate hikes.

Minutes from the Fed’s previous meeting, when it raised interest rates by half a percentage point and cautioned rates may need to remain higher for longer, are due to be released at 2 p.m. ET (1900 GMT).

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Meanwhile, U.S.-listed Chinese firms such as Alibaba Group Holding Ltd, JD.com Inc and Baidu Inc jumped more than 6% on hopes of a post-COVID recovery in China and on talk of support for the country’s housing sector.

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Wall Street’s main indexes saw a rocky start to 2023 on Tuesday, with the biggest drags being Tesla Inc after the electric-vehicle maker missed estimates on deliveries and Apple Inc that slumped after a rating downgrade.

The declines followed a hit to U.S. equities in 2022 on worries of a recession due to aggressive monetary policy tightening, with the three main stock indexes logging their steepest annual losses since 2008.

Investors on Wednesday will also monitor job openings data from the U.S. Labor Department and ISM manufacturing data due at 10 a.m. ET to assess the strength of the U.S. economy.

“The minutes of the latest Fed meeting will be devoured later, in a search for clues about how much higher rates will go before policymakers consider pressing the pause button,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

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Market participants see a 68.8% chance of a 25-basis point rate hike from the U.S. central bank in February, and see rates peaking at 4.95% by June..

The more comprehensive non-farm payrolls report is due on Friday, with investors hoping to see signs of cooling in the labor market that could give the Fed reason to slow its monetary policy tightening.

At 6:00 a.m. ET, Dow e-minis were up 65 points, or 0.2%, S&P 500 e-minis were up 11.75 points, or 0.31%, and Nasdaq 100 e-minis were up 50.25 points, or 0.46%.

Microsoft Corp slipped 2.1% in premarket trading after UBS downgraded the company’s shares to “neutral.” (Reporting by Shubham Batra and Amruta Khandekar in Bengaluru; Editing by Shounak Dasgupta)

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