S&P 500 contracts drift, Treasuries flat before rate decision
Yen strengthens; Turkey’s lira hit by U.S. sanctions threat
U.S. equity-index futures and European stocks entered a holding pattern on Wednesday and Treasuries were steady before the conclusion of a Federal Reserve meeting where investors anticipate policy makers will signal a readiness to lower rates.
Contracts for the three main U.S. gauges traded little changed while the Stoxx Europe 600 edged lower, with declines in real estate shares outweighing an advance in banks. Shares rose in Asia following the rally on Wall Street a day earlier, which was boosted when President Donald Trump tweeted he will sit down with Chinese President Xi Jinping at the G-20 summit next week. Hong Kong’s shares led the region, advancing as much as 2.6%. The yield on 10-year Treasuries held below 2.1%, while Japan’s benchmark yield hit a three-year low. The yen strengthened for a third day.
As many of the world’s biggest central banks signal a shift to easier policy, traders are weighing that against trade war fears and signs of cooling global growth. Trump said Tuesday that he had a “very good” phone conversation with Xi. The two leaders will hold an “extended meeting” at the G-20 summit on June 28-29 in Osaka and “our respective teams will begin talks prior to our meeting,” Trump said on Twitter.
“At this stage, we are not getting as optimistic as maybe the stock market is about the headlines overnight,” Laura Fitzsimmons, executive director for rates and FX sales at JPMorgan Chase & Co., told Bloomberg TV in Sydney about the developments on trade. “Stock markets can run for a little bit longer but as we get closer to the event itself the risk of disappointment will again appear.”
Elsewhere, West Texas oil held on to Tuesday’s gains after OPEC and its allies moved closer to agreeing a meeting where they may extend supply cuts. The Turkish lira fell on a report the Trump administration is weighing new sanctions on the country over its purchases of the Russian S-400 missile-defense system.
Here are some key events coming up:
- The Fed, Bank of Japan and Bank of England all set monetary policy, along with central banks in Norway, Brazil, Taiwan and Indonesia.
- The Fed’s two-day meeting ends Wednesday with a decision and press conference. Officials are expected to debate a rate cut to shelter the U.S. economy, in part, from the fallout caused by escalating trade disputes.
- Final May CPI data for Britain are due on Wednesday.
- U.K. retail sales are set for release on Thursday.
These are the main moves in markets:
- The Stoxx Europe 600 Index dipped 0.1% as of 8:13 a.m. London time.
- Futures on the S&P 500 Index fell less than 0.05%.
- Hong Kong’s Hang Seng Index increased 2.3% on the biggest climb in more than six months.
- The MSCI Emerging Market Index rose 1.3%, the highest in six weeks on the largest advance in more than a week.
- The Bloomberg Dollar Spot Index decreased less than 0.05%.
- The Japanese yen gained 0.1% to 108.30 per dollar.
- The euro rose less than 0.05%.
- The Turkish lira declined 0.4%.
- The South Korean Won jumped 0.8% to 1,176.00 per dollar, the strongest in six weeks.
- The yield on 10-year Treasuries rose less than one basis point to 2.06%.
- Britain’s 10-year yield climbed one basis point to 0.819%.
- Japan’s 10-year yield dipped two basis points to -0.139%.
- Gold fell 0.1% to $1,345.24 an ounce.
- West Texas Intermediate crude climbed 0.1% to $53.98 a barrel.
- Iron ore increased 1.6%.
— With assistance by Juliette Saly
19 June 2019, 17:25 GMT+10