World stocks cool, await Fed signals
DOLLAR LOSES GROUND AS US RATE HIKE QUESTIONS MOUNT
World shares yesterday slipped from record highs as surging Chinese stocks took a breather and investors began to move to the sidelines before the Federal Reserve’s policy meeting.
The dollar also weakened and Wall Street was expected to open lower, with more macro data and company earnings set to give the Fed its latest look at the US economy.
European bourses also fell, while the dollar’s decline saw the euro reach a three-week high and helped the pound recover after weak UK growth data caused it to tumble.
Britain’s quarterly growth came in at 0.3 per cent, below forecasts of 0.5 per cent and the slowest pace in more than two years. The figures came just nine days before a British election, which is already brewing doubts about Britain’s future cohesion and its membership of the European Union.
“I think the real risk is so much uncertainty,” said Societe Generale strategist Kit Juckes. 1.4 per cent. They had almost doubled in value since October, when Western and domestic market-friendly trading links were set up. Hopes monetary policy would ease also helped.
The Fed will hold no news conference and provide no forecasts when its meeting ends today. Analysts expect little or no change in its policy statement after recent weakerthan-forecast domestic data.
The dollar, whose strength has been contributed to the soft data, sagged against most of the world’s other major currencies and was at a session low of 118.85 yen after touching 119.44 overnight. The Bank of Japan also meets this week.
“There’s been disappointment with the US data — that’s clear, and that’s feeding into the dollar price action,” said Phyllis Papadavid, senior global FX strategist at BNP Paribas in London.
“But people are in wait-andsee mode ahead of the Fed.”
US Treasury bond yields inched lower. The euro climbed to a three-week peak of $1.0945, up from a 12-year low of $1.0457 in mid-March.