Saturday, April 13, 2024

Stocks, bond yields in holding pattern ahead of Fed decision

by Associated Press

Stocks are off to a mixed lower start on Wall Street Wednesday as traders wait for the latest decision on interest rates from the Federal Reserve. The S&P 500 was flipping between small gains and losses in the early going as gains for health care and some big technology companies were tempered by losses for banks and energy companies. The Dow Jones Industrial Average was little changed and the Nasdaq Composite edged up 0.1%. European markets were slightly higher and Asian markets closed mostly lower. Crude oil prices were up slightly. The yield on the 10-year Treasury note edged lower to 1.49%.

Global shares were mixed in quiet trading Wednesday ahead of a U.S. Federal Reserve meeting that may give clues on what lies ahead with its massive support for markets.

France’s CAC 40 added 0.1% in early trading to 6,645.92, while Germany’s DAX slipped 0.2% to 15,698.98. Britain’s FTSE 100 gained nearly 0.1% to 7,176.83. U.S. shares were set to drift lower, with the future for the Dow industrials slipping 0.2% to 34,117, while the S&P 500 future fell nearly 0.1% to 4,233.62.

Trading in shares of Chinese property developer Soho China Ltd. was suspended in Hong Kong. Bloomberg reported that the Blackstone Group is close to a deal on acquiring the company in a deal that could be valued at $3 billion. The report cited unnamed “people familiar with the matter.”

The developer, which is known for eye-catching projects in prominent locations, issued a statement saying its shares were suspended from trading as of Tuesday under Hong Kong’s takeover code.

Soho China’s shares have surged 67% in the past month and nearly 30% in the past five days.

Japan released data that showed its trade surplus jumped 49.6% in May from the previous year, but analysts said that was less than expected and highlights how the world’s third largest economy and its exports may be only slowly recovering from the pandemic.

Investors were also gauging data out of China on industrial production and retail sales, both of which showed growth signaling a recovery from the damage of the coronavirus pandemic.

Japan’s Nikkei 225 slipped 0.5% to finish at 29,291.01. South Korea’s Kospi rose 0.6% to 3,278.68. Australia’s S&P/ASX 200 gained nearly 0.1% to 7,386.20. Hong Kong’s Hang Seng lost 0.7% to 28,436.84, while the Shanghai Composite fell 1.1% to 3,518.33.

“Asian markets are quiet ahead of the Fed,” said Robert Carnell, regional head of research Asia-Pacific at ING. “China’s data dump may stir things up a bit today, but the main focus will be on the Fed’s message and any hints they may give.”

The fear is that if higher inflation gets entrenched, the Fed may pull back on the $120 billion in monthly purchases of bonds it’s pledged to keep mortgages cheap and longer-term interest rates low, and might raise short-term interest rates off their record low.

The Fed has so far said that it sees higher inflation as temporary. It will announce its latest decision on rate policy Wednesday afternoon.

“From a prices standpoint, we’re seeing inflationary pressure, and we believe the jury is still out on the timing and extent of when we see a leveling or whether this new new normal of higher prices is cemented,” said Greg Bassuk, founder and CEO of AXS Investments.

Most economists expect the Fed to say again on Wednesday that it sees higher inflation being only temporary, which would allow it to hold steady on its support for markets. But they also say Wednesday afternoon could offer the first sign that the Fed is mulling when to start slowing its purchases of bonds.

Many investors agree with the Fed’s view that higher inflation won’t last very long, and that it’s the expected result of an economy escaping out of pandemic lockdowns.

In energy trading, benchmark U.S. crude gained 8 cents to $72.20 a barrel in electronic trading on the New York Mercantile Exchange. It gained $1.24 on Tuesday to $72.12 per barrel. Brent crude, the international standard, added 10 cents to $74.09 a barrel.

In currency trading, the U.S. dollar fell to 109.97 Japanese yen from 110.07 yen. The euro stood unchanged at $1.2127.

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