Stocks hit new high but all eyes on the Fed
london — World stocks eked out a new record high on Wednesday and the dollar dipped against its major rivals with the focus on a US Federal Reserve policy meeting that may give clues as to whether it will raise interest rates for a third time this year.
European shares opened lower after a slight rise on Asian bourses was enough to push MSCI’s World index fractionally higher to a new record.
But with the Fed due to unveil its policy decision and economic forecasts at 1800 GMT, caution prevailed. There was little followthrough from US President Donald Trump’s bellicose rhetoric over North Korea on Tuesday.
The dollar fell less than 0.1 per cent against a basket of major currencies and was down against the euro, the yen and sterling.
US 10-year Treasury yields, which edged up on Tuesday, retreated slightly. German equivalents edged up less than a basis point to 0.45 per cent.
The European Central Bank is widely expected to say next month that it will begin scaling back its asset-purchase stimulus programme from January, even though a stronger euro, which dampens inflation, has complicated the outlook.
“If we move closer to a US rate hike, that should come along with a bit more dollar strength and euro weakness which would harden the ECB’s exit case and be a headwind for government bonds,” said Commerzbank strategist Rainer Guntermann.
The pan-European STOXX 600 share index dipped less than 0.1 per cent. An index of European banks was a leading faller, down 0.3 per cent. MSCI’s broadest index of AsiaPacific shares outside Japan added 0.1 per cent. Japan’s Nikkei closed up 0.05 per cent and Shanghai added 0.3 per cent. — Reuters