Stocks slip ahead of Fed decision
0.8% Decline in DAX to 11,695.08 points
bangkok — Shares were mostly lower in Europe early Wednesday ahead of the Federal Reserve’s policy statement, after a lackluster day of trading in Asia.
Germany’s DAX sank 0.8 per cent to 11,695.08 and the CAC 40 in France gave up 0.1 per cent to 5,418.15. Britain’s FTSE 100 slipped less than 0.1 per cent to 7,321.74.
US stocks fell on Wednesday after economic bellwether FedEx issued a downbeat profit outlook and as investors waited for more clarity on the Federal Reserve’s interest rate forecasts for the rest of the year.
In early trade, the Dow Jones Industrial Average was down 122.30 points, or 0.47 percent, at 25,765.08, the S&P 500 was down 7.71 points, or 0.27 percent, at 2,824.86 and the Nasdaq Composite was down 8.59 points, or 0.11 percent, at 7,715.36.
Ten of the 11 major S&P sectors retreated, while health and technology were the biggest drags. FedEx Corp fell 6.1 per cent after the package delivery company cut its 2019 profit forecast for the second time. Its shares dragged the Dow Jones Transport index down 1.40 per cent.
White House officials said on Tuesday that top US trade and economic officials will visit China late next week for another round of negotiations on their dispute over Beijing’s industrial policies and other issues.
The officials, who spoke on background because they weren’t authorised to comment publicly, said Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer will lead the delegation.
The news suggested hope for progress, albeit delayed, in the tariffs war between the two largest economies. Business lobbyists say an agreement now probably won’t be reached until late April.
In Asia, fresh news on China-US trade talks helped Chinese benchmarks to trim early losses. The Shanghai Composite was flat at 3,090.64 and Hong Kong’s Hang Seng fell 0.5 per cent to 29,320.97.
Elsewhere in Asia, Japan’s Nikkei 225 index gained 0.2 per cent to 21,608.92, while the S&P ASX 200 gave up 0.3 per cent to 6,165.30. South Korea’s Kospi was virtually unchanged at 2,177.10. India’s Sensex advanced 0.2 per cent to 38,422.94.
Shares were higher in Taiwan and Thailand but fell in Singapore and Indonesia. Global investors are looking ahead to the Federal Reserve’s interest rate policy update due later Wednesday. The central bank has signaled that it will be “patient” in raising interest rates.
“Against the backdrop of heightened concerns over US-China trade and ahead of the Fed meeting, Asia markets may well trade cautiously once again,” Jingyi Pan of IG said in a commentary. She added that “the broad sense is that regional markets will be attuned toward the Fed meeting.”
The Fed has made clear that with a dimmer economic picture in both the United States and globally, it no longer sees the need to keep raising rates as it did four times in 2018. Among the key factors, besides slower growth, are President Donald Trump’s trade war with China, continually low inflation levels and Prime Minister Theresa May’s struggle to execute Britain’s exit from the European Union.
“It’s a Fed day and investors will scrutinize its communiqué with two key factors — the duration of patience and the overall outlook on the economy,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“We believe the Fed will not surprise the markets but add another caveat, a trade deal, to data dependence and patience.”
Hopes of a dovish stance from the Fed hit the rate-sensitive financial stocks, which fell 0.35 per cent, while the bank subsector slipped 0.28 per cent.
The dollar rose to 111.58 Japanese yen from 111.40 yen. The euro slipped to $1.1343 from $1.1351 on Tuesday. Benchmark US crude oil picked up 4 cents to $59.33 per barrel in electronic trading on the New York Mercantile Exchange. It gave up 9 cents to close at $59.29 a barrel on Tuesday. Brent crude, the international standard, gained 20 cents to $67.81 a barrel.