Fed minutes loom, ExxonMobil-Pioneer deal talk - what's moving markets

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Investing.com -- U.S. stock futures edged up ahead of the publication of minutes from the Federal Reserve's September meeting. Meanwhile, several Fed officials drop hints that the central bank may choose to refrain from further interest rate hikes this year following a recent spike in U.S. Treasury yields. Elsewhere, ExxonMobil (NYSE:XOM) is reportedly set to announce a massive acquisition of rival Pioneer (NYSE:PXD) worth around $60 billion, and German sandal manufacturer Birkenstock prices its initial public offering.

1. Futures inch higher with Fed policy hints in focus

U.S. stock futures were pointing slightly higher on Wednesday, with investors looking ahead to the release of minutes from the Federal Reserve's latest meeting and mulling over comments from officials at the central bank this week.

At 04:50 ET (08:48 GMT), the Dow futures contract was up by 23 points or 0.1%, S&P 500 futures gained 4 points or 0.1%, and Nasdaq 100 futures rose by 23 points or 0.2%.

The main indices finished the previous session in the green, supported by statements from Fed policymakers that buoyed hopes that the world's most important central bank would choose not to further lift interest rates in the short-term. Several Fed officials noted that a jump in U.S. Treasury yields in recent weeks to 16-year highs could end up tightening financial conditions, meaning that fewer rate hikes may be needed.

On Tuesday, the 30-stock Dow Jones Industrial Average climbed by 0.4%, the benchmark S&P 500 added 0.5%, and the tech-heavy Nasdaq Composite advanced by 0.6%.

2. Fed minutes loom large

Attention now turns to the upcoming release of minutes from the Fed's September gathering, when the rate-setting Federal Open Market Committee opted to keep borrowing costs steady.

At the time, the decision was seen as emblematic of a more carefully calibrated interest rate strategy, with the Fed keen to control price growth without sparking a meltdown in the wider economy. Officials had previously embarked on an aggressive campaign of policy tightening that saw rates zoom up from near-zero to their highest point in more than two decades.

Crucially, the Fed also signalled that another rate rise may be required this year to help corral stubbornly elevated inflation -- a prospect that subsequently contributed to the surge in U.S. bond yields. Given the shift in tone in recent days from Fed members, analysts say that any perceived dovish language in the minutes will likely be in focus.

Markets will have more data to parse through on Thursday, when the monthly consumer price index -- a key inflation gauge -- is set to be published.

3. ExxonMobil expected to announce $60 billion Pioneer tie-up - Reuters

ExxonMobil is reportedly anticipated to say on Wednesday that it will purchase rival Pioneer Natural Resources in a $60 billion deal, according to Reuters, in what would be the biggest acquisition by any company so far this year.

Citing unnamed sources familiar with the matter, Reuters reported that Exxon will make a pure stock offer valued at over $250 a share for Pioneer.

The deal would all but cement Exxon's position as one of the leading U.S. oil groups, giving the Houston-based company increased access to the Permian Basin -- one of America's largest oil fields -- as well as a decade of low cost production. Pioneer, a key beneficiary of a decade-long boom in U.S. shale output, is the third-biggest producer in the Permian Basin.

Exxon declined to comment and Pioneer did not immediately respond to a request for comment, Reuters said.

Any tie-up would likely be subjected to a review from U.S. competition regulators, who have been recently ratcheting up scrutiny on high-profile corporate mergers.

4. Oil bobs around flatline amid ongoing supply worries

Oil prices oscillated around the flatline on Wednesday as traders still grappled with the potential of supply disruptions following the escalation of violence in the Middle East.

The market has calmed down significantly after both crude benchmark contracts rose just over 4% on Monday, but fears remain of political and economic contagion from the fighting ignited by Saturday’s attacks by Palestine militant group Hamas on Israelis near Gaza.

Market participants will also be on the lookout for U.S. weekly oil inventory data from the industry body American Petroleum Institute, due a day later than usual following Monday’s Columbus Day holiday.

By 04:50 ET, the U.S. crude futures were widely unchanged at $86.00 a barrel, while the Brent contract climbed 0.1% to $87.75.

5. Birkenstock prices IPO

Birkenstock has priced its shares at $46 in its U.S. initial public offering ahead of their inaugural trading session on the New York Stock Exchange on Wednesday.

The figure is in the middle of Birkenstock's indicated price range of $44 to $49 a share and gives the German shoemaker a fully diluted valuation of around $9.3 billion.

According to sources quoted by Reuters, investor demand was strong enough to allow for the number to be closer to the top end of that band, but both the company and its underwriters decided to take a more conservative approach due to market volatility.

Birkenstock, known for its trendy suede sandals, will garner about $1.5B from the sale of 32.3 million shares. Much of the proceeds will go to L Catterton, the private equity group backed by billionaire Bernard Arnault and luxury goods giant LVMH.

The firm will be the fourth major business to hold a public debut in the U.S. in the last four weeks. The crush of flotations initially spurred enthusiasm for a recovery in the recently dry IPO market, but these hopes have been tempered after these newly-listed shares gave up most of their early gains.