Investors Hold Fire Ahead of Fed Decision
19 June 2019 - 9:30PM
Dow Jones News
By Nathan Allen and Joanne Chiu -- European stocks and U.S. futures mostly unchanged
-- Yield on 10-year Treasurys rose
-- Asian indexes rallied, led by gains in Hong Kong
European stocks and Wall Street futures were broadly flat
Wednesday as investors avoided big bets ahead of the Federal
Reserve's highly anticipated interest-rate decision later in the
day.
Losses in retail and telecom companies led the Stoxx Europe 600
benchmark down 0.1% in midday trade.
Shares of EasyJet PLC, Air France-KLM and British Airways-owner
International Consolidated Airlines Group SA fell sharply after
HSBC downgraded the stocks, warning that weakening demand for
short-haul flights was likely to weigh on earnings across the
sector.
Chinese equities led gains in Asia, where markets welcomed
upbeat comments on trade from President Trump and the prospect of
fresh central-bank stimulus for the eurozone.
Hong Kong's benchmark Hang Seng Index rose 2.6% to a one-month
high, while the Shanghai Composite was up 2.2%. Other major indexes
in Japan, Singapore, South Korea and Taiwan gained more than
1%.
Australian stocks reached their highest level in more than 11
years, with the country's ASX 200 benchmark moving within 3% of
2007's best-ever finish.
Major indexes around the world surged Tuesday, while bond yields
dropped after European Central Bank President Mario Draghi signaled
the ECB could cut rates and expand its bond-buying program to shore
up eurozone inflation.
On Tuesday, Mr. Trump and Chinese President Xi Jinping agreed to
meet at next week's Group of 20 summit in Japan, sparking hopes for
a trade truce and driving up U.S. indexes near their record
highs.
"The upcoming meeting in Japan is unlikely to deliver a major
breakthrough for the U.S.-China trade relationship, but having the
two sides talk is better than no talk," said Steven Leung,
executive director of institutional sales at UOB Kay Hian.
Wednesday's focus remained squarely on the Fed, which is set to
publish a statement Wednesday outlining its position on future rate
cuts.
ING senior rates strategist Benjamin Schroeder said investors
hoping for a July rate cut will likely be disappointed. Chairman
Jerome Powell will instead aim to strike a balance between avoiding
committing to any near-term loosening, while hinting at the
possibility of future cuts, Mr. Schroeder said.
Further complicating the situation, Mr. Trump suggested Tuesday
that he would consider demoting Mr. Powell if he isn't satisfied
with the meeting's outcome. Mr. Trump has called repeatedly on the
Fed to lower interest rates to boost the economy.
Elsewhere, the U.K.'s consumer inflation rate rose 2% on the
year in May, in line with expectations. The Bank of England is due
to publish its own rate decision Thursday, though analysts don't
expect Gov. Mark Carney to echo the ECB's dovish rhetoric.
In commodities, global oil benchmark Brent crude fell 0.7% to
$61.70 a barrel, while gold slipped 0.4% to $1,346 a troy
ounce.
The WSJ dollar index, which measures the currency against a
basket of its peers, was flat.
Write to Joanne Chiu at joanne.chiu@wsj.com
(END) Dow Jones Newswires
June 19, 2019 07:15 ET (11:15 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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