The Fed's policy meeting announcement should provide insight into the prospect of any near-term changes to US interest rates © AFP
Wednesday 11:50 BST
What you need to know
- Stock markets lacklustre despite record close in New York
- Eyes on Fed’s policy announcement
- Havens rise as Trump hits out at North Korea
- Sterling lifted as retail sales data powers through forecasts
- Oil prices rise but traders wary of inventory report
Leading quote
“The wait for the Federal Reserve’s monetary policy announcement is going to overhang markets all day,” says Chris Bailey, European strategist at Raymond James.
“It should all be about Janet Yellen’s comments concerning the timing of balance sheet reduction but this has got slightly sidetracked by the rising probability — now over 50 per cent for the first time in months — of a rate rise by the Fed in December, meaning the press conference is going to be a funny mixture of questions and potential insights.”
Hot topic
Stock markets are in neutral, failing to capture the momentum from another record close in New York.
Meanwhile, haven assets, which had been coming off recent highs earlier in the week, turned round after Donald Trump, the US president, used a speech at the UN to issue his harshest warning yet to North Korea.
The focus is now on the Federal Reserve and its policy meeting announcement, which could include plans to reduce its balance sheet and should provide insight into the prospect of any near-term changes to US interest rates.
Bourses are struggling in spite of fresh records set in the US, where the Dow Jones Industrial Average on Tuesday set a new closing high of 22,370.80 with a gain of 0.2 per cent, as did the Nasdaq with a 0.1 per cent rise to 6,461.32. Futures trade is pointing to a flat open to US trade ar 2.30pm London time.
European indices are treading water. London’s FTSE 100 is up 0.1 per cent, as is Frankfurt’s Xetra Dax. The region-wide Euro Stoxx 600 is flat.
In Japan the Topix index is also flat a day after closing at its highest point in more than two years. South Korea’s Kospi Composite is down 0.2 per cent. In Hong Kong the Hang Seng is 0.2 per cent firmer and the Shanghai Composite is also up 0.2 per cent.
Forex and fixed income
The dollar index, which measures the greenback against a basket of global peers, is down 0.1 per cent.
Haven currencies are rising after Mr Trump’s speech. Japan’s yen is 0.2 per cent higher at ¥111.41 per dollar, while the Swiss franc is 0.2 per cent stronger at SFr0.9603 per dollar.
Sterling rose sharply after UK retail sales data for August powered through forecasts, looking to give the Bank of England more room to contemplate a rate rise. The pound rose by as much as 0.7 per cent to a day-high of $1.3607. But it slipped back to stand up 0.2 per cent over the session at $1.3536.
Bonds are steady, with modest gains for yields on safer debt. The yield on 10-year US Treasuries is down 1 basis point at 2.24 per cent. Yields rise when debt prices fall. Germany’s 10-year debt yield is up 1 basis point at 0.451 per cent.
Commodities
Gold is up 0.1 per cent to $1,312.60 an ounce, extending its bounce from two-week lows plumbed on Monday. The haven metal found buyers after Mr Trump’s warning to the UN that the North Korean leader was “on a suicide mission for himself and for his regime”.
Oil prices are on the rise, though the market remains wary ahead of the weekly oil supply report from the US Energy Information Administration, which according to ANZ analysts could show a bump in crude oil inventories that would weigh on prices.
Brent crude, the international benchmark, is up 0.4 per cent at $55.38 a barrel while West Texas Intermediate, the main US marker, remains below $50 but is up 0.8 per cent on the session at $49.86.
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