Markets Pause Ahead of Fed Decision
01 Mai 2019 - 01:44PM
Dow Jones News
By Paul J. Davies
Investors were looking ahead to the U.S. interest-rate decision
later on Wednesday, with stocks set to open slightly higher after a
very quiet morning in Europe and Asia where many markets were
closed for the May Day holiday.
U.S. equity futures pointed to opening rises of 0.3% for both
the S&P 500 and the Dow Jones Industrial Average, but Apple was
trading up nearly 6% in premarket trading following news that the
maker of the iPhone plans to return more cash to shareholders.
Treasury yields slid marginally ahead of a Federal Reserve press
conference that is expected to confirm a watch-and-wait stance
toward inflation.
Stock markets in Japan, China, Korea and across most of mainland
Europe were shut, but with Danish and U.K. stocks trading, The
Stoxx Europe 600 was flat and the FTSE 100 was down 0.1%.
There was some limited, slightly positive economic data from
South Korean, where exports sank for a fifth straight month in
April but by less than expected. Exports fell 2% compared with the
same month last year, according to preliminary data from the trade
ministry. That was less severe than the market forecast of a 5.6%
fall.
"The improvement was broad-based across key sectors, and the
improvement of auto and shipbuilding is notable," wrote Marie Kim
and Jeeho Yoon at Citigroup. "However, exports of semiconductor
continued to be weak reflecting lethargic recovery of the unit
price."
Elsewhere, U.K. house price growth remained weak with April data
lifting the annual rate to 0.9% from 0.7% recorded in March. That
was better than the consensus forecast for no rise in the rate of
growth.
But this anemic performance came despite increased risk-taking
by lenders. Mortgage rates have fallen for borrowers taking out
very large loans, helpful for first-time buyers, and lenders are
offering longer-term mortgages to make monthly repayment rates more
affordable, according to Pantheon Macro Economics.
The Bank of England is due to publish its latest inflation
report and rate decision on Thursday and could be the one major
central bank to maintain a bias toward tighter policy. "November
remains the most likely timing for the next hike in rates," said
Paul Hollingsworth, U.K. economist at BNP Paribas. "Even a modest
amount of tightening would see the Bank of England stick out like a
sore thumb against a backdrop of an easing bias elsewhere."
Yields on 10-year Treasurys, which rise when prices fall, were
at 2.496% from 2.501% Tuesday, after President Trump once more took
to Twitter to complain that the Fed had "incessantly lifted rates,
even though inflation is very low." The Fed last raised rates four
months ago and in January signaled a U-turn on its policy of
cutting its balance sheet and pushing through rate rises.
German 10-year bund yields returned to positive territory
Tuesday and rose again to 0.012% Wednesday, while gilt yields in
the U.K. were flat at 1.158%.
The dollar extended several days of relative weakness following
last week's rally with the WSJ Dollar Index down 0.11%.
In commodities, Brent crude oil rose by 0.1% to $72.13 a barrel,
while gold slipped 0.1% to $1.284.30 an ounce.
Write to Paul J. Davies at paul.davies@wsj.com
(END) Dow Jones Newswires
May 01, 2019 07:29 ET (11:29 GMT)
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