Global stocks edged higher on Wednesday, pulling back from two straight sessions of losses, as investors positioned for a closely watched US Federal Reserve interest-rate decision later in the day.
Equities had come under pressure over the past two sessions as rising government bond yields and higher oil prices fuelled concerns about inflation and the economic outlook.
Markets have also been pricing in a more than 90 per cent probability of a 25-basis-point increase when the Fed announces its decision, according to CME Group’s FedWatch tool.
On Wall Street, the benchmark S&P 500 and the Nasdaq were trading higher with technology and communication services stocks driving gains. The Dow was lower.
Energy stocks were the main drag on the day as oil prices retreated from recent gains.
The Dow Jones Industrial Average fell 0.18 per cent, the S&P 500 rose 0.26 per cent, and the Nasdaq Composite rose 0.60 per cent.
In Europe, the pan-European STOXX 600 rose 0.44 per cent. Britain’s FTSE 100 index added 0.28 per cent while benchmarks in Germany, France and Spain also saw gains.
“The market has been trading down into the Fed decision, which it typically does, because it is discounting the uncertainty,” said Gerry Sparrow, chief investment officer at Sparrow Capital Management.
“My expectation is that since interest rates breached the 5 per cent handle or are bumping up against, that means that there’s inflation in the system… I think they’ll raise interests.”
MSCI’s global equities index gained 0.35 per cent after falling in the previous two sessions.
The Federal Reserve will announce its policy decision at 1800 GMT (2 pm ET), followed by a press conference by Chair Kevin Warsh.
The 2-year note yield, which typically moves in step with interest rate expectations for the Fed, fell 4.42 basis points to 4.619 per cent.
The yield on benchmark US 10-year notes fell 3.3 basis points to 4.963 per cent.
Oil dips
Oil prices fell as reports that Saudi Arabia was offering additional crude cargoes via Oman after drone attacks damaged the kingdom’s oil pipeline to the Red Sea. The move appeared to ease concerns about the scale of Middle East supply disruptions.
Vessel passage through the Strait of Hormuz remained constrained as attacks in the region intensified.
Brent crude futures were down 2.4 per cent at $106.01 a barrel.
In currencies, the dollar was flat against major peers including the euro and the yen.
The euro down 0.07 per cent at $1.1535.
The Japanese yen weakened 0.04 per cent against the greenback to 155.16 per dollar.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was flat at 99.652.
In cryptocurrencies, bitcoin fell 0.42 per cent to $75,580.56 as it continued reeling from the US Senate’s decision to vote against advancing comprehensive cryptocurrency legislation backed by President Donald Trump.
Spot gold rose 1.3 per cent to $4,348.69 an ounce.