While you were sleeping: Wall St mixed ahead of Fed

Tuesday 15th March 2016

Wall Street was mixed while US Treasuries rose a day before the Federal Reserve begins its two-day policy meeting that will be closely watched for clues on the path for interest rate increases. Oil fell as Iran appears unlikely to agree to an output freeze.

The Federal Open Market Committee starts its two-day meeting on Tuesday. It’s not expect to raise rates but it’s expected to flag further hikes ahead as the US economy has recently shown evidence of stronger-than-expected resilience amid weakening growth elsewhere including China and Europe.

Wall Street was mixed. In 1.40pm New York trading, the Dow Jones Industrial Average rose 0.19 percent, while the Nasdaq Composite Index gained 0.20 percent. In 1.26pm trading, the Standard & Poor’s 500 Index inched 0.06 percent lower.

“This is really probably not a day to make too many big bets, given that we could have some outlook changing information in the next couple of days,” Ablin, chief investment officer at BMO Private Bank in Chicago, told Reuters.

The Dow moved higher as gains in shares of Boeing and those of McDonald’s, last up 1.6 percent and 1.1 percent respectively, outweighed declines in shares of Pfizer and those of Travelers, last down 1.2 percent and 0.9 percent respectively.

US Treasuries rose, pushing yields on the 10-year note two basis points lower to 1.96 percent. Morgan Stanley analysts are bullish on Treasuries, forecasting that 10-year yields will fall to 1.45 percent by the end of September, according to Bloomberg

“The global backdrop for rates markets looks so supportive that 2016 may become known as the ‘Year of the Bull,’” according to a report by Morgan Stanley analysts issued on Sunday, according to Bloomberg.

In Europe, the Stoxx 600 Index finished the day with a 0.7 percent advance from the previous close. France’s CAC 40 Index gained 0.3 percent, the UK’s FTSE 100 Index added 0.6 percent, while Germany’s DAX Index rallied 1.6 percent.

Here investors are still digesting the better-than-expected fresh stimulus measures announced by European Central Bank President Mario Draghi last Thursday, as well as his statement that he’s not planning any further rate cuts.

“We’re almost back to where we started the year and we still see equity prices rallying further,” William Hobbs, head of investment strategy at Barclays’ wealth-management unit in London, told Bloomberg. “After a muted initial reaction to the ECB action, markets finally decided that they liked the move because it signalled that central banks are not out of ammunition, and that further policy action doesn’t necessarily have to destroy banks.”

Oil prices fell, halting a recent rally and pushing US crude more than 4 percent lower, as data showed an increase in US stockpiles. Also, an agreement between major oil-producing nations on an output freeze might prove challenging as Iran, while supporting the plan, wants to ramp up its own crude exports to pre-sanction levels.

“We feel that the bulk of this stronger than expected 5-6 week price advance has been seen and that prices will be shifting into a near term consolidation phase," Jim Ritterbusch of Chicago energy consultancy Ritterbusch & Associates told Reuters.

BusinessDesk.co.nz

Comments from our readers

No comments yet