(Bloomberg) -- US equity futures posted small gains as a watchful tone spread across global markets before the Federal Reserve’s interest-rate decision.
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Traders are split over whether the US central bank will cut rates by 25 or 50 basis points later on Wednesday, with market-implied odds on the bigger reduction currently at 50%. The Fed will also release new quarterly projections, and Chair Jerome Powell will hold a press conference.
S&P 500 and Nasdaq 100 contracts rose by about 0.2%. Europe’s Stoxx 600 index was steady, as was a gauge of Asian stocks.
The Japanese yen climbed as much as 0.8%, signaling expectations of a narrowing divergence in policy between the Fed and the Bank of Japan, which decides on rates on Friday. The dollar and Treasuries were little changed.
“There are more questions than answers on a 25- or 50-basis-point cut,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. “It appears like a cautious day on the bench, by the sidelines, as the Fed is awaited.”
Economists largely anticipate the Federal Open Market Committee will reduce rates by a quarter point to a range of 5% to 5.25%, though a number expect a half-point move. Investors see even odds of a half-point adjustment.
Fresh quarterly projections in the form of the so-called “dot plot” released at the end of the central bank’s two-day meeting will offer further insight into the path ahead for borrowing costs and the economy.
In the UK, money markets see the Bank of England delivering modestly less easing after services inflation rose to 5.6% in August from 5.2% in July, while the headline figure held at just above the 2% target. The pound strengthened after Wednesday’s data.
Chinese stocks listed on mainland markets were modestly higher after a holiday break, shrugging off the gains in Hong Kong equities amid calls for major economic stimulus.
Chinese chip-related stocks jumped after the nation claimed a breakthrough in the development of homegrown chip-making equipment. Shanghai Zhangjiang High-Tech Park Development jumped by the daily 10% limit, while Changchun UP Optotech and Sai Micro Electronics also rallied.
Oil edged lower after a two-day gain as traders assessed indications of higher US stockpiles, rising tensions in the Middle East, and the likely course of the Federal Reserve’s rate path. Crude jumped Tuesday after thousands were hurt in what Hezbollah labeled an attack by Israel involving pagers in Lebanon.
Key events this week:
Eurozone CPI, Wednesday
Fed rate decision, Wednesday
UK rate decision, Thursday
US US Conf. Board leading index, initial jobless claims, US existing home sales, Thursday
FedEx earnings, Thursday
Japan rate decision, Friday
Eurozone consumer confidence, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 was little changed as of 8:13 a.m. London time
S&P 500 futures rose 0.2%
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average rose 0.1%
The MSCI Asia Pacific Index was little changed
The MSCI Emerging Markets Index fell 0.1%
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro was little changed at $1.1121
The Japanese yen rose 0.5% to 141.70 per dollar
The offshore yuan rose 0.2% to 7.0973 per dollar
The British pound rose 0.2% to $1.3189
Cryptocurrencies
Bitcoin rose 0.6% to $60,498.69
Ether fell 0.5% to $2,332.49
Bonds
The yield on 10-year Treasuries was little changed at 3.65%
Germany’s 10-year yield was little changed at 2.15%
Britain’s 10-year yield advanced one basis point to 3.78%
Commodities
Brent crude fell 0.7% to $73.19 a barrel
Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Rob Verdonck and James Hirai.
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