Stocks Extend Gains Ahead of Key Central Bank Decisions
March 19 2019 - 5:34AM
Dow Jones News
By David Hodari
Global stocks mostly edged up on Tuesday as investors awaited
key central bank meetings later in the week.
Interest-rate decisions and forward guidance were expected from
both the Federal Reserve and the Bank of England. Market
participants will be watching the banks' statements for signals on
the health of global economic growth and the potential impact of
political risk events such as Brexit.
The Stoxx Europe 600 rose 0.4% in early trading. Gains for basic
resources stocks slightly outweighed a downtick in the index's
banking basket, with Antofagasta shares up 2.5% after the mining
company reported its earnings. French telecommunications company
Iliad slid 6.4% after its own release.
The Federal Reserve's monetary policy statement, expected
Wednesday, was in particular focus. Weakening data out of several
major economies in recent months have prompted waves of anxiety,
with investors signaling their unease at what they saw as overly
aggressive Fed policy.
In response, Federal Reserve Chairman Jerome Powell has sought
to calm those nerves, with increasingly dovish briefings and an
insistence that the central bank will rely on data to inform future
decisions.
The bank is set to release an updated chart of its officials'
individual projections for interest rates on Wednesday at the end
of their two-day meeting. CME Group data forecast around one
interest-rate increase during 2019, although those polled gave a
98.7% probability to the Fed leaving rates unchanged at its March
meeting.
"There's a lot priced into the Fed remaining dovish, although
perhaps there'll be a little bit of anxiety as that meeting gets
closer," said Shannon Saccocia, chief investment officer at wealth
management company Boston Private. "If they come out and say they
expect one rate raise this year and that they remain data
dependent, that would be a rangebound positive for markets."
U.S. futures put the S&P 500, the Dow Jones Industrial
Average and the Nasdaq-100 on course to open 0.2% higher. The
S&P 500 on Monday closed at its highest level since early
October.
Elsewhere in Europe, the British pound climbed 0.1% against the
U.S. dollar, extending its gains so far in 2019 to 4% amid the
latest twist in the Brexit saga.
The speaker of the House of Commons on Monday unexpectedly
blocked Prime Minister Theresa May's government from putting her
departure deal to lawmakers for a third time, buoying the
likelihood of a long delay before Britain leaves the European
Union.
With the EU unlikely to want the U.K. to leave without a deal,
"we suspect that the pound stays supported, given that neither side
wants a no-deal and we look to be on the tortuous path to a long
delay," said Chris Turner, head of foreign exchange strategy at ING
in a note.
Calm trading in Europe followed similar moves in Asia, where
Japan's Nikkei 225 slipped 0.1% and Hong Kong's Hang Seng gained
0.2%.
Emerging-market traders were awaiting further developments in
U.S.-China trade talks, with reports over the weekend suggesting
that a summit between President Trump and China's President Xi
proposed for March may be pushed back to June.
The WSJ Dollar Index was down 0.1%, extending its five-day
losses to 0.5% partly thanks to expectations the Fed will leave
rates unchanged. The yield on 10-year U.S. Treasurys edged down to
2.592% from 2.605%. Yields fall as prices rise.
In commodities, Brent crude futures climbed 0.3% to $67.72 a
barrel, closing at a four-month high Monday, after OPEC and its
allies recommitted to production cuts until the end of June.
Other commodities also rose, with copper futures up 0.8% at
$6,485 a metric ton.
Write to David Hodari at David.Hodari@wsj.com
(END) Dow Jones Newswires
March 19, 2019 05:19 ET (09:19 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.