FOMC and BOE rates kept unchanged

Stock markets were mostly softer amid a busy day for company results, while a weaker dollar boosts gold after the US Federal Reserve left interest rates unchanged on Wednesday. Energy prices were higher and government bonds are in demand, nudging down yields.

On Wednesday, the Federal Open Market Committee delivered what many in the market consider a dovish commentary on likely policy trajectory. In the UK, the Bank of England left monetary policy unchanged on Thursday and delivered its inflation report, raising its growth forecast for 2017 from 1.4% to 2%.

The Benchmark US 10-year Treasury yields, which fell back in the wake of the Fed’s comments, were down another four basis points to 2.44%, while the equivalent maturity German Bunds eased 4bp to 0.42%. The benchmark 10-year gilt yields shrugged off the BoE’s economic upgrade and tracking the sector tone, dipping 8bp to 1.37%.

Equities quoted on the New York’s S&P 500 shed 5.5 points to 2,274, at the as trading got under way, and this dip – predicted by futures for much of the global session – is damping sentiment across most stock markets. The pan-European Stoxx 600 index is down 0.3% as traders absorb results from the likes of Deutsche Bank, Shell and Astra Zeneca. London’s FTSE 100 is benefiting from the softer pound, adding 0.7%.

Asian bourses weakened as the session wore on, with Tokyo’s broad Topix index down 1.1% as exporters displayed distaste for the strengthening yen, currently up 0.9% to ¥112.24 per dollar. In Hong Kong, the Hang Seng index fell 0.6% after rising as much as 0.4% at the outset. Initial gains for consumer staples stocks were offset by falls in the real estate, telecoms and consumer discretionary segments. Markets in China remained closed for the lunar New Year holiday.