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Stocks across the world were mostly in a holding pattern on Wednesday as investors grappled with a wall of macro catalysts, from trade talks and the Fed meeting to a slew of corporate earnings. The pound halted a two-day decline and U.K. shares gained after lawmakers voted to renegotiate Brexit.
The Stoxx Europe 600 Index edged lower as national gauges in the region were mixed. The U.K.’s FTSE 100 Index posted the biggest gains, advancing for a second day. Futures on the S&P 500 Index were little changed. Stocks in Japan and China slid, while they rose in South Korea, Australia and Hong Kong. Treasury yields ticked up slightly and the dollar drifted. The yuan advanced to the highest since July on hopes for the U.S.-China trade talks getting underway in Washington. Gold climbed to an eight-month high, underscoring investor caution.
Strong gains in January for equities are facing a test from a mixed bag of corporate earnings, with tech giants including Facebook and Microsoft due to report today. Investors are also awaiting the Fed’s policy decision, with markets expecting a rate hold and focusing on the commentary amid signs of slowing global growth. Chinese trade negotiators are in Washington this week for talks with U.S. counterparts.
“Such is the extent of uncertainty across global markets at the moment that investor sentiment is struggling to gain any meaningful traction,” Simon Ballard, a macro strategist at First Abu Dhabi Bank, said in a note. “The overarching veil of caution suggests that near-term positive momentum potential will likely remain limited. It is still very much global trade and the global rates outlook that sit at the heart of investor focus.”
The pound largely held losses after lawmakers voted against a key proposal that sought to rule out the prospect of the U.K. crashing out of the European Union without a deal. Members of Parliament including Prime Minister Theresa May backed a proposal to strip out the most difficult part of her proposed divorce package and re-open talks with the European Union.
Apple shares rose in post-market trading after first-quarter earnings offered some reassurance to investors that there is life beyond the company’s flagship product.
Elsewhere, the Mexican peso declined as Fitch Ratings Inc. cut the debt of state oil company, Petroleos Mexicanos, known as Pemex, to one notch above junk. Iron ore surged after Brazil’s Vale SA, the world’s largest producer, outlined plans to cut output after a deadly dam breach.
Among key events in the coming days:
Chinese President Xi Jinping’s top economic aide, Vice Premier Liu He, will meet with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Wednesday and Thursday.Tech giants Microsoft, Facebook, Alibaba, Qualcomm, Tesla, Samsung and Sony announce earnings.Wednesday Fed Chairman Jerome Powell holds a news conference after the FOMC rate decision.
These are the main moves in markets:
The Stoxx Europe 600 Index decreased 0.1 percent as of 8:04 a.m. London time.Futures on the S&P 500 Index were unchanged.The MSCI All-Country World Index rose less than 0.05 percent.The U.K.’s FTSE 100 Index jumped 0.5 percent, reaching the highest in more than a week.The MSCI Emerging Market Index increased 0.2 percent.
The Bloomberg Dollar Spot Index gained less than 0.05 percent.The euro decreased 0.1 percent to $1.1427.The British pound rose less than 0.05 percent to $1.3072.The Japanese yen increased 0.1 percent to 109.34 per dollar.
The yield on 10-year Treasuries climbed one basis point to 2.72 percent.Germany’s 10-year yield fell one basis point to 0.20 percent.Britain’s 10-year yield dipped one basis point to 1.259 percent, the lowest in more than two weeks.Japan’s 10-year yield declined less than one basis point to 0.005 percent.
West Texas Intermediate crude fell 0.2 percent to $53.18 a barrel.Gold gained 0.2 percent to $1,313.96 an ounce, the highest in almost nine months.Iron ore surged as much as 9.5 percent to the highest since March 2017 in Singapore.
–With assistance from Sarah Ponczek and Reade Pickert.
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