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OVERVIEW: Stocks across the world held firm on Wednesday as investors grappled with a wall of catalysts, from trade talks and the Fed meeting to a slew of corporate earnings.
The pound halted a two-day decline and UK shares gained after lawmakers voted to renegotiate Brexit. Futures across the S&P 500, Nasdaq and Dow Jones indexes all rose, while the Stoxx Europe 600 Index edged higher amid mixed national gauges in the region.
The UK’s FTSE 100 Index posted the biggest advance, climbing for a second day. Stocks in Japan and China slid, while they increased in South Korea, Australia and Hong Kong. Treasury yields ticked up slightly and the dollar drifted. The yuan advanced to the highest since July on hopes for the US-China trade talks getting underway in Washington.
Gold climbed to an eight-month high, underscoring lingering investor caution. Lackluster corporate earnings in January have added to investor concerns about the health of the global economy, and all eyes will be on tech giants including Facebook, Microsoft and Samsung when they report today. That will be the backdrop for the Fed’s policy decision and especially its assessment of the US economy, while the arrival of Chinese negotiators in Washington for talks to resolve the ongoing trade dispute adds another layer of complexity.
“Such is the extent of uncertainty across global markets at the moment that investor sentiment is struggling to gain any meaningful traction,” Simon Ballard, a macro strategist at First Abu Dhabi Bank, said in a note.
“The overarching veil of caution suggests that near-term positive momentum potential will likely remain limited. It is still very much global trade and the global rates outlook that sit at the heart of investor focus.
”The pound rose, trimming losses from Tuesday after lawmakers voted against a key proposal that sought to rule out the prospect of the UK crashing out of the European Union without a deal. Members of Parliament including Prime Minister Theresa May backed a proposal to strip out the most difficult part of her proposed divorce package and re-open talks with the European Union.
Apple shares extended gains in pre-market trading after first-quarter earnings offered some reassurance to investors that there is life beyond the company’s flagship product. Elsewhere, the Mexican peso declined as Fitch Ratings cut the debt of the state oil company to one notch above junk.
Iron ore surged after Brazil’s Vale SA, the world’s largest producer, outlined plans to cut output after a deadly dam breach.
Among key events in the coming days: Chinese President Xi Jinping’s top economic aide, Vice Premier Liu He, will meet with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Wednesday and Thursday. Tech giants Microsoft, Facebook, Alibaba, Qualcomm, Tesla, Samsung and Sony announce earnings. Wednesday Fed Chairman Jerome Powell holds a news conference after the FOMC rate decision.
These are the main moves in markets:
Stocks
The Stoxx Europe 600 Index gained 0.1% as of 09:27 London time. Futures on the S&P 500 Index climbed 0.2%. The MSCI All-Country World Index rose 0.1%. The UK’s FTSE 100 Index jumped 0.8% to the highest in more than a week. The MSCI Emerging Market Index increased 0.2%.
Currencies
The Bloomberg Dollar Spot Index declined less than 0.05%. The euro fell less than 0.05% to $1.1428. The British pound increased 0.3% to $1.3106. The Japanese yen climbed less than 0.05% to 109.35 per dollar.
Bonds
The yield on 10-year Treasuries increased one basis point to 2.72%. Germany’s 10-year yield declined less than one basis point to 0.20%. Britain’s 10-year yield decreased one basis point to 1.261%. Japan’s 10-year yield fell less than one basis point to 0.005%.
Commodities
West Texas Intermediate crude declined less than 0.05% to $53.30 a barrel. Gold rose 0.1% to $1,313.68 an ounce, the highest in almost nine months. Iron ore surged as much as 9.5% to the highest since March 2017 in Singapore. – Bloomberg
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