Stocks Advance, Dollar Drops Ahead of Fed Decision: Markets Wrap

(Bloomberg) — Stocks in Europe advanced along with U.S. equity-index futures after a mixed session in Asia Wednesday as investors awaited the Federal Reserve’s next move on monetary policy. The dollar headed for a three-month low against a basket of peers.

Banks and carmakers led a broad advance in the Stoxx Europe 600 index. S&P 500 futures rose after the index on Tuesday halted a surge that drove it into the black for 2020. Benchmarks dipped in China and Japan. Hong Kong stocks fluctuated, while South Korea and Australia eked out modest gains. Treasury yields edged lower, and crude oil retreated.

While the Fed is all but certain to keep its benchmark overnight rate unchanged when it wraps up its two-day meeting Wednesday, investors will be looking for reassurance on the central bank’s willingness to continue to support the economy as it recovers from the coronavirus pandemic. Policy makers may also discuss targeting yields for some Treasury maturities, a strategy known as yield-curve control.

“The Fed has offered a substantial amount of support to the U.S. economy in the wake of the Covid-induced crisis,” said Siobhan Redford, an analyst at Firstrand Bank Ltd. in Johannesburg. “Expectations are for further accommodation to be extended through the bond-buying program, some kind of yield curve control or perhaps another channel.”

What to watch this week:

The Fed’s next policy decision is Wednesday. Officials are expected to leave rates above zero.OECD releases its economic outlook Wednesday, a twice-yearly analysis of the economic prospects of member countriesEuro-area finance ministers meet Thursday to discuss the EU’s recovery package and Eurogroup presidency succession.

These are some of the main moves in markets:

Stocks

The Stoxx Europe 600 Index gained 0.7% as of 8:07 a.m.in London.Futures on the S&P 500 rose 0.5%.The MSCI Asia Pacific Index climbed 0.3%.

Currencies

The Bloomberg Dollar Spot Index fell 0.4%.The euro rose 0.1% to buy $1.1351.The yen was at 107.40 per dollar, up 0.3%.The offshore yuan held at 7.0695 per dollar, up 0.1%.

Bonds

The yield on 10-year Treasuries dipped one basis point to 0.82%.Germany’s 10-year yield was little changed at -0.31%.

Commodities

West Texas Intermediate crude dropped 1.8% to $38.21 a barrel.Gold was at $1,718.54 an ounce, up 0.2%.

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.