Global Stocks Mixed Ahead of Fed Decision
December 11 2019 - 9:49AM
Dow Jones News
By Avantika Chilkoti
Global markets were mixed Wednesday as investors await the
latest policy decision from the U.S. Federal Reserve for fresh cues
on the strength of the world's largest economy.
Futures tied to the Dow Jones Industrial Average drifted between
gains and losses before edging down 0.1%, while the Stoxx Europe
600 index gained 0.1%. In Asia, the Shanghai Composite Index closed
up 0.2%.
Markets are braced for a busy few days as the U.S. and European
central banks hold policy meetings that will provide fresh
assessments of key economic indicators, as well as a general
election in the U.K. that could prove to be a turning point for
Brexit.
The Fed will on Wednesday afternoon conclude a two-day meeting,
where policy makers are widely expected to hold the federal-funds
rate unchanged. Analysts point out that there is little reason for
the Fed to change course now, given the continuation of U.S.-China
trade talks, as well as strong data on both consumption and the
labor market since the committee's last meeting.
Some analysts are flagging concerns that existing tariffs
imposed on Chinese imports are already starting to hurt the U.S.
economy, and could lead to a recession in the second half of 2020.
That may prompt the Fed to begin another cycle of interest-rate
cuts next year, they said.
"It's going to come home to roost for the one element of the
U.S. economy that has always, always, always pulled the economy out
of any slump and that's the U.S. consumer," said Matt Cairns, a
rates strategist at Rabobank.
Meanwhile, fresh data Wednesday showed consumer prices rose
moderately in November, up a seasonally adjusted 0.3% from the
previous month despite historically low unemployment and the trade
conflict with China. Economists surveyed by The Wall Street Journal
had expected the consumer-price index to rise 0.2%.
Investors are also continuing to parse headlines for indications
on the progress of the U.S.-China trade talks, after the The Wall
Street Journal reported Tuesday that negotiators from both sides
are preparing to delay fresh U.S. tariffs on Chinese imports due to
go into effect on Dec. 15.
Ahead of the opening bell in New York, shares in Children's
Place declined over 16% after the retailer's third-quarter sales
missed analysts' estimates and it reduced its revenue forecast.
In Europe, the U.K.'s FTSE 250 equity index slipped 1.1% ahead
of a general election scheduled to be held Thursday that will help
determine the course of the U.K.'s withdrawal from the European
Union.
Some opinion polls show Prime Minister Boris Johnson's lead
narrowing, and a new, closely watched YouGov poll couldn't rule out
a hung Parliament. It showed that Mr. Johnson's Conservative Party
is set to win a majority of 28 seats, down from a 68-seat majority
forecast in a previous survey last month. The pound edged down less
than 0.1% against the dollar, after hitting its highest level in
eight months earlier this week.
The political uncertainty in the U.K. would continue and Brexit
negotiations could drag on if there is no clear majority in
Parliament, according to Mr. Cairns. "Then we are back to exactly
where we have been for the past three years, this goes on and we
are in a deadlock within the House," he said.
Meanwhile, the state-backed oil major Saudi Arabian Oil Co.,
which was among the most closely watched stocks, gained 10% by the
close of trading in Riyadh. That was the upper limit for the stock,
which made its debut after the world's largest initial public
offering.
Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com
(END) Dow Jones Newswires
December 11, 2019 09:34 ET (14:34 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.