LONDON: European equities retreated Wednesday, shrugging off earlier gains in Asia, as investors waited on an expected interest rate hike from the US Federal Reserve.
Around midday, London drifted 0.1 percent lower while Frankfurt shed 0.3 percent and Paris was down 0.6 percent in value, compared with Tuesday’s closing level.
Asian indices had risen, tracking a seventh successive record on Wall Street.
The US central bank’s two-day monetary policy meeting concludes Wednesday with markets expecting another December interest rate hike.
All eyes will be on what Fed boss Janet Yellen says in her post-meeting conference, with investors hoping for clues on future policy in the wake of President-elect Donald Trump’s surprise election victory.
“The outcome of today’s Federal Reserve meeting is likely even more certain than it was this time last year, with the markets pricing in a rate hike,” Spreadex analyst Connor Campbell told AFP.
“In light of this, investors’ focus this evening may be more on any hints for the Fed’s path in 2017 than the actions taken today.
“On the other hand, if Yellen and co. do not raise rates, things may well go bananas,” Campbell added.
In the second half of 2016, increasingly rosy economic data on the health of the world’s largest economy has helped sway reluctant policymakers toward raising rates.
In December last year, the Fed had increased its benchmark federal funds rate for the first time in more than nine years from near zero to a still ultra-low 0.25-0.50 percent.
“The US economy is ready, stock markets are ready, and the Fed has to start its rate-hiking cycle some time — no time like the present,” said City Index analyst Kathleen Brooks.
Global equities and the dollar have rallied in the five weeks since Donald Trump won the US election, with traders betting his plans for big spending, tax cuts and deregulation will fan already healthy economic growth.
Expectations that will in turn light a fire under inflation has led to speculation the Fed will be forced to embark on a more aggressive program of rate hikes that previously thought.
The Asian gains come after the Dow finished at a record high for the seventh successive day and ended just shy of the 20,000 mark.
“Today is one of those days where the folly of trying to make sense of any one day’s moves is self-evident,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
“Last night we saw a huge rally in US and European stocks, which has propelled the big US indexes to new record highs.
“So much for fear of the US Fed or profit taking, Santa Claus is coming to town it seems.”
Tokyo managed to eke out a small but eighth successive rise and is sitting at its highest mark since mid-December.
However, the losses were limited after the Bank of Japan’s closely watched Tankan survey showed business confidence among the country’s major manufacturers rising for the first time in more than a year.
Around midday, London drifted 0.1 percent lower while Frankfurt shed 0.3 percent and Paris was down 0.6 percent in value, compared with Tuesday’s closing level.
Asian indices had risen, tracking a seventh successive record on Wall Street.
The US central bank’s two-day monetary policy meeting concludes Wednesday with markets expecting another December interest rate hike.
All eyes will be on what Fed boss Janet Yellen says in her post-meeting conference, with investors hoping for clues on future policy in the wake of President-elect Donald Trump’s surprise election victory.
“The outcome of today’s Federal Reserve meeting is likely even more certain than it was this time last year, with the markets pricing in a rate hike,” Spreadex analyst Connor Campbell told AFP.
“In light of this, investors’ focus this evening may be more on any hints for the Fed’s path in 2017 than the actions taken today.
“On the other hand, if Yellen and co. do not raise rates, things may well go bananas,” Campbell added.
In the second half of 2016, increasingly rosy economic data on the health of the world’s largest economy has helped sway reluctant policymakers toward raising rates.
In December last year, the Fed had increased its benchmark federal funds rate for the first time in more than nine years from near zero to a still ultra-low 0.25-0.50 percent.
“The US economy is ready, stock markets are ready, and the Fed has to start its rate-hiking cycle some time — no time like the present,” said City Index analyst Kathleen Brooks.
Global equities and the dollar have rallied in the five weeks since Donald Trump won the US election, with traders betting his plans for big spending, tax cuts and deregulation will fan already healthy economic growth.
Expectations that will in turn light a fire under inflation has led to speculation the Fed will be forced to embark on a more aggressive program of rate hikes that previously thought.
The Asian gains come after the Dow finished at a record high for the seventh successive day and ended just shy of the 20,000 mark.
“Today is one of those days where the folly of trying to make sense of any one day’s moves is self-evident,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
“Last night we saw a huge rally in US and European stocks, which has propelled the big US indexes to new record highs.
“So much for fear of the US Fed or profit taking, Santa Claus is coming to town it seems.”
Tokyo managed to eke out a small but eighth successive rise and is sitting at its highest mark since mid-December.
However, the losses were limited after the Bank of Japan’s closely watched Tankan survey showed business confidence among the country’s major manufacturers rising for the first time in more than a year.
