Markets higher ahead of Fed rate call
LONDON: Stock markets mostly rose on Wednesday ahead of an expected interest rate hike from the US Federal Reserve, traders said.
As the euphoria over the historic summit between US President Donald Trump and North Korea leader Kim Jong Un recedes, investors are focusing on macroeconomic issues with concerns over global trade causing some discomfort.
“With a rate hike widely expected, investors are focused on the Fed’s statement wording, economic projections and press conference for clarification on the future pace of interest rate hikes,” said Jo Horton, a senior economist at St. George Bank in Sydney. Key European equity markets were all higher, and Wall Street also showed slight gains at the opening bell in New York.
“The week’s prior events have taken a backseat to today’s Federal Reserve’s rate decision, with meetings of the European Central Bank and the Bank of Japan looming later in the week,” said Charles Schwab analysts in a note.
Speculation about further interest rate increases was fuelled by data Tuesday showing US inflation at a six-year high in May.
The dollar continued to enjoy support ahead of the Fed decision, with the pound hamstrung by British Prime Minister Theresa May’s Brexit struggles after she made some big compromises to push through key legislation.
But the euro was up against the greenback ahead of the ECB’S policy meeting on Thursday, as it seeks to wind down its crisis-era stimulus.
On equity markets, Hong Kong’s main index dropped 1.2 per cent with shares in Chinese telecoms equipment maker ZTE collapsing more than 40 per cent as it resumed trading after agreeing to pay a massive fine over its handling of a US sanctions violation.
Traders work on the floor of the New York Stock Exchange on Wednesday.