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 was almost unchanged. 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 U.S. Federal Reserve 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, with the central bank likely to face fresh pressure from President Trump given that it will be a U.S. election 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.
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 18% after the retailer's third-quarter sales missed analysts' estimates and it reduced its revenue forecast.
Over in Europe, the U.K.'s FTSE 250 equity index slipped 1.4% 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.
Later in the day, investors will be watching closely as the U.S. Labor Department offers a look at the latest consumer-price index data, which measures changes in how much Americans are paying for everyday items ranging from food to dental care. Economists surveyed by The Wall Street Journal expect the index rose 0.2% in November from the previous month.
Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com
(END) Dow Jones Newswires
December 11, 2019 08:07 ET (13:07 GMT)
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