Sunday, 15 July, 2018

USA dollar slides, yields slip, stocks steady after Fed meeting

Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York U.S Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York U.S
Scott Davis | 22 March, 2018, 02:10

US stocks gained on Wednesday afternoon, ahead of an near-certain interest rate hike by the Federal Reserve, as Facebook Inc's (FB.O) shares reversed course to trade higher and energy stocks got a boost from rising oil prices.

The Federal Open Market Committee is expected to lift its key interest rate during its two-day policy meeting ending Wednesday.

Markets participants are still trying to decipher the number of rate hikes this year - whether the Fed will stay at three increases as previously forecast by policy makers, or whether a fourth hike is possible.

Declines in shares of Facebook and Twitter limited gains on Wall Street.

The collapse in Facebook shares dragged the entire technology sector on the first day of the week, which put pressure on the rest of the market as well. The S&P 500 lost 2.56 points, or 0.09 percent, to 2,714.38.

The technology index.SPLRCT was up 0.36 percent.

Ahead of the Fed announcement, 2-year Treasury note yields, which are highly sensitive to Fed policy expectations, hit their highest in more than nine years on Wednesday morning at 2.35 percent.

Few economists expect new Fed chair Jerome Powell to alter the trajectory of the bank's anticipated rate path, but as it is his first meeting at the helm, investors have been somewhat on edge as the meeting approaches.

At 12:54 p.m. ET, the Dow Jones Industrial Average .DJI was up 0.55 percent at 24,864.3.




Stocks have struggled this year while bond yield have moved higher.

A pan-European equity index fell nearly 0.3%, its early weakness accelerating after the WSJ report on China and a tech shares index reversing an early bounce.

"But if we see retaliation, and significant trade disruptions, it's a different order or magnitude, could begin to affect global growth forecasts".

Concerns over the imposition of USA trade tariffs on metals and against China continue to weigh on financial markets.

Facebook shares gained 0.74 percent to stem its recent sell-off over the past two days, which cost the social media company about $50 billion in market value after reports of data misuse that raised broader questions about consumer privacy and the need for tougher regulation.

"Our base case is the Fed would raise four times this year, and that would not have a material impact to the equity markets to the upside", Josh Navarro, global investment specialist at JP Morgan Private Bank, told Reuters.

Crude oil prices jumped more than 2 percent to $63 per barrel.

As a result shares in soybean exporter Archer-Daniels (ADM.N) fell 1 percent and Bunge (BG.N) dropped 0.7 percent. U.S. West Texas Intermediate (WTI) crude futures gained $1.63, or 2.6 percent, to settle at $65.17, their highest since February 2.

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