NEW YORK: European and US stocks avoided major swings Tuesday as investors eyed looming central bank meetings in the US and Japan.
After last week’s healthy gains, traders appeared to be taking a step back before the US Federal Reserve concludes two days of talks on Wednesday with a policy statement that could shed light its plans for interest rates.
In the wake of turmoil across world markets early in the year, the Fed has lowered expectations of rate rises this year, saying it would closely watch overseas developments before making a move.
Traders have predicted the next rise will be towards the end of the year but every utterance from the bank will be pored over for clues.
“Regardless of the Fed outlook… markets price in less than 50 percent probability for a rate hike to happen this year,” noted Brenda Kelly, head analyst at trading firm London Capital Group.
Art Hogan, chief market strategist at Wunderlich Securities, said the market is focused on the Fed’s message. “We’ll be looking for the tone.”
In Europe, London’s benchmark FTSE closed slightly higher. Shares in Paris and Frankfurt slipped, while US stocks finished nearly flat following a trove of mostly solid earnings reports from Procter & Gamble, DuPont and other large companies.
The euro rose against the dollar.
Alex Holmes, of Capital Economics, agreed that it was “very unlikely” that the Fed would announce a change in policy but said they would not rule out “tweaks to its statement that left the door open for another rate hike in June.”
“Indeed, we expect not only another 25bp (basis point) hike then, but two more before the year is over.”
Earlier in Asia, Japan’s Nikkei stocks index ended 0.5 percent lower, with the yen holding Monday’s gains against the dollar despite speculation the country’s central bank will ramp up its stimulus when its two-day policy meeting ends Thursday.
The BoJ has been tipped to further ease monetary policy after this month’s double earthquake in southern Japan that caused factory closures at a time when the country’s economy is stuttering.
Oil prices rose sharply on speculation that Saudi Arabia is planning to cut back drilling as the market worries about excessive global supplies.
Traders are also awaiting the release of weekly US crude stockpiles data on Wednesday.
– Key figures around 2100 GMT –
New York – Dow: UP 0.1 percent at 17,990.32 (close)
New York – S&P 500: UP 0.2 percent at 2,091.70 (close)
New York – Nasdaq: DOWN 0.2 percent at 4,888.31 (close)
London – FTSE 100: UP 0.4 percent at 6,284.52 points (close)
Frankfurt – DAX 30: DOWN 0.3 percent at 10,259.59 (close)
Paris – CAC 40: DOWN 0.3 percent at 4,533.18 (close)
EURO STOXX 50: UP 0.1 percent at 3,121.76
Tokyo – Nikkei 225: DOWN 0.5 percent at 17,353.28 (close)
Shanghai – Composite: UP 0.6 percent at 2,964.70 (close)
Hong Kong – Hang Seng: UP 0.5 percent at 21,407.27 (close)
Euro/dollar: UP at $1.1298 from $1.1266 Monday
Dollar/yen: UP at 111.31 yen from 111.21 yen
Copyright AFP (Agence France-Presse), 2016
Courtesy : BRecorder