Global shares: US, Europe flat to higher awaiting trade news; Asia mixed

US markets

US equities were flat to higher Wednesday as the Fed policy announcement matched expectations and left markets unmoved, while traders awaited more news on the trade front.  The Dow industrials rose 0.1 percent, the S&P 500 rose 0.3 percent, and the NASDAQ was up 0.4 percent.

The Fed left rates unchanged, and its generally positive economic outlook suggested rates would stay on hold. Meanwhile, markets remain uncertain about the outlook for US-China trade talks, but expect the US to delay imposing new tariffs scheduled to take effect on Sunday while the negotiations continue.

Among sectors, materials, technology, and industrials outperformed while energy and financials lagged. Energy shares weakened following a drop in oil prices on news of an unexpected rise in US oil stocks, while banks were soft as interest rates declined.  Among companies in focus, Dow member Home Depot fell 1.8 percent after downgrading its 2020 sales. Gamestock, the video game retailer, dropped 15.1 percent after a huge earnings miss and slashing its earnings and same-store sales guidance.

In US economic news, consumer price figures showed inflation pressures are moderate and running only slightly below what the Federal Reserve wants to see. The CPI gained 0.3 percent in November for a year-on-year rate of 2.1 percent. Running right at consensus is the ex-food ex-energy core, up 0.2 percent on the month and 2.3 percent on the year.

These data reflect observations at 4:00 PM US ET:  Dated Brent spot crude oil fell 48 cents to US$63.88, while gold rose US$11.00 to US$1,480.00. The US dollar fell against most major currencies.  The US Treasury 30-year bond yield fell 4 basis points to 2.23 percent while the 10-year note yield fell 4 basis points to 1.79 percent.

European markets

Major European equities indexes ended flat to higher Wednesday in cautious trading ahead of key news events, including the day’s FOMC announcement. The Europe-wide STOXX 600 rose 0.2 percent, the German DAX gained 0.6 percent, the French CAC gained 0.2 percent, and the UK FTSE-100 was up 0.03 percent. 

Trading was limited by caution before Wednesday’s Fed announcement, due after the European close, and ahead of Thursday’s UK elections plus ECB and SNB policy council meetings. Polls suggesting a tightening UK race have raised concerns that the Conservative Party will lack the votes to proceed with the latest Brexit plan. These fears weakened sterling and UK domestic shares, while export-oriented stocks held up better.

Markets were buoyed by a 5 percent rally in Inditex, the Spanish fashion retailer, on a positive earnings surprise. On the downside, JD Sports, the UK retailer, dropped 9.5 percent after reporting its largest shareholder cut its stake. Among sectors, utilities, basic resources, and autos outperformed, while real estate, oil & gas, and media lagged.

Asia Pacific markets

Major Asian markets were mixed Wednesday, with a light regional data calendar providing limited guidance to investor sentiment and attention focused on the upcoming Federal Reserve decision. Investors for now appear confident that US tariff increases scheduled to take effect on December 15 will not go ahead. Hong Kong’s Hang Seng index outperformed, closing up 0.8 percent on the day, while Australia’s All Ordinaries index and the Shanghai Composite index advanced 0.6 percent and 0.2 percent respectively.  Japanese shares weakened, with the Nikkei and Topix indices closing down 0.1 percent and 0.3 percent respectively.

Japan's producer price index rose 0.1 percent on the year in November after falling 0.4 percent in October, the first year-on-year increase in producer prices since May. The index rose 0.2 percent on the month after increasing 1.1 percent previously. Stronger year-on-year growth in food and energy prices were partly offset by weaker growth in utilities charges.

Looking forward

On Thursday in Asia/Pacific, Japanese machine orders, Indian industrial production, and Indian CPI data are due for release. In Europe, the ECB and SNB are due to announce their latest monetary policy decisions. In data, German CPI, Swiss producer and import prices, French CPI, Italian unemployment, and Eurozone industrial production are due. In US data, jobless claims and PPI-FD reports are scheduled.