London:Global stock markets were mostly steady Wednesday as investors awaited the outcome of a US Federal Reserve policy meeting, expected to deliver a rate increase.
The euro and sterling softened against the dollar pending the monetary policy decision, while oil prices slipped back after a recent surge.
Wall Street was in positive territory in midday trading, while European bourses essentially held their breath.
Market players were “biding their time” ahead of the rate decision, said David Cheetham at xtb.com, while David Madden at CMC Markets called the markets’ mood “subdued” ahead of the Fed’s call.
A quarter-point increase has already been factored in by markets, and attention will focus on any hint of another rate increase before the end of the year, dealers said.
“The statement is probably going to be the most important component of the update,” Madden said.
– ‘Trotting along nicely’ –
“There is growing chatter that the Fed will hike rates in December, and dealers will be listening out for clues about a possible rate rise at the back end of the year,” he said.
Asian stocks closed earlier with solid increases, helped by strong gains to share prices of energy companies after an oil rally that petered out Wednesday.
The dollar was up against the euro and pound, and the yen.
“The US domestic economy is trotting along nicely; the rest of the world is not in the same place and there’s no doubt that global investor caution is continuing to increase as the trade war between the US and China appears to be heating up,” noted Nick Twidale, chief operating officer at Rakuten Securities Australia.
Neil Wilson at Markets.com said that for Fed watchers, “the key question is what monetary policy in 2019 looks like.” He remarked that “precious little” had changed since the US central bank’s June forecasts to suggest it might shelve anticipated rate hikes.
While worries about the China-US trade row erode confidence to some extent, the strong US economy and healthy corporate outlook are providing some buoyancy for now.
A particular concern for the global economy are higher oil prices that help fuel inflation and eventually interest-rate hikes.
The weekend decision by major producers from inside and outside OPEC to maintain crude output despite US President Donald Trump’s call for lower prices has sent both main contracts sharply higher this week.
Trump hit out at OPEC in his United Nations General Assembly speech Tuesday, accusing it of “ripping off the rest of the world”.
Brent North Sea oil continues to sit around four-year highs, with a stronger dollar and expected output cut from Iran providing support as well.
“Oil prices remain in the bulls’ domain amid concern that US sanctions on Iranian crude oil exports will result in much tighter physical market conditions once they take effect in November,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
– Key figures around 1540 GMT –
London – FTSE 100: UP 0.1 percent at 7,511.49 points (close)
Frankfurt – DAX 30: UP 0.1 percent at 12,385.89 (close)
Paris – CAC 40: UP 0.6 percent at 5,512.73 (close)
EURO STOXX 50: UP 0.3 percent at 3,430.12
New York – Dow Jones: UP 0.2 percent at 26,542.35
Tokyo – Nikkei 225: UP 0.4 percent at 24,033.79 (close)
Hong Kong – Hang Seng: UP 1.2 percent at 27,816.87 (close)
Shanghai – Composite: UP 0.9 percent at 2,806.81 (close)
Euro/dollar: DOWN at $1.1748 from $1.1767 at 2015 GMT
Pound/dollar: DOWN at $1.3176 from $1.3181
Dollar/yen: UP at 112.98 yen from 112.96 yen
Oil – Brent Crude: DOWN 48 cents at $81.39 per barrel
Oil – West Texas Intermediate: DOWN 51 cents at $71.77