On 20 September, 2017 - Stocks were broadly unchanged as investors waited for the FOMC announcement

The Fed left its key fed funds rate unchanged and will begin tapering its bond holdings in October.

United States

Stocks were volatile after the Federal Reserve’s announcement even though there was nothing unexpected in its decision although they signaled that it was still eyeing a possible rate increase this year. Both the Dow Jones Industrials and S&P rose to new record closing highs. The Dow was up 0.2 percent and the S&P inched up 0.1 percent. However, the Nasdaq was 0.1 percent lower.

With the focus on the Fed, traders shrugged off a report from the National Association of Realtors showing an unexpected decrease in existing home sales in the month of August. NAR said existing home sales slumped 1.7 percent to an annual rate of 5.35 million after tumbling by 1.3 percent to a rate of 5.44 million in July. Hurricane Harvey made a large dent in sales in the Houston, Texas area.

Alnylam Pharmaceuticals posted a gain after the biopharmaceutical company reported positive trial results for its treatment of a rare genetic disease. Transportation stocks also advanced. Energy stocks advanced alongside oil prices after the US Energy Information Administration reported that refiners continued to bring back operations last week following hurricane-related disruptions, increasing demand. Apple retreated after problems with latest Apple Watch were reported.

The Federal Reserve said they will begin unwinding its large portfolio of bonds next month. That sent bond yields and banks and other financial companies higher. High-dividend stocks like household goods makers and utilities fell. Income-seeking investors find those stocks less appealing when bond yields move higher. The Fed also said that it would leave the policy fed funds interest rate between 1 percent and 1.25 percent, but indicated they might increase the rate one more time this year and three times in 2018 if persistently low inflation rebounds. The Fed has raised the rate four times since December 2015 after keeping it at a record low for seven years after the 2008 financial crisis.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$1.70 to US$1,311.30. Copper futures were down 0.25 percent to US$2.96. WTI spot crude was up 93 US cents to US$50.41. Dated Brent spot crude was up US$1.11 to US$56.25. The US dollar was up against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian dollar. The currency slipped against the Australian dollar. The Dollar Index was up 0.7 percent. The yield on the US Treasury 30 year bond slipped 1 basis point to 2.80 percent and 10 year note was up 3 basis points to 2.27 percent.

European markets

European stocks were mixed with little change — investors stayed on the sidelines reluctant to take any major position prior to the Federal Reserve’s policy announcement which would occur after markets here were closed for the day. The FTSE lose 3.3 points while the SMI added 2.45 points. Both the CAC and DAX added 0.1 percent. The IBEX declined 0.8 percent following news that police in Spain arrested some Catalonian officials for their alleged involvement in planning a vote on Catalonia’s secession from Spain. That ballot is set for October 1 and has been declared illegal by the Spanish government.

Hochtief dropped on a report that its supervisory board is discussing an offer to buy Spain's Abertis. ThyssenKrupp climbed after the company signed a memorandum of understanding with India's Tata Steel for combining their European steel activities in a 50/50 joint venture. E.ON jumped after it said it is in advanced negotiations with Finland's Fortum Oyi about an agreement to potentially dispose its 46.65 percent stake in Uniper. Fortum surged in Helsinki. Ipsen rallied after receiving approval from the European Commission for their drug Xermelo.

Cairn Energy fell after issuing a procedural update on its dispute with the Government of India under the UK India Bilateral Investment Treaty. Ryanair Holdings declined on reports that the discount airline has offered its pilots a one-off bonus of up to €12,000 in a bid to avoid the damage caused by flight cancellation through the end of October. Diageo was lower after the drinks giant warned its first-half organic net sales growth rate will be affected by the later timing of Chinese New Year and by the expected impact of the highway ban in India. Kingfisher jumped after its first-half profit beat forecasts.

Germany's producer prices increased 2.6 percent on the year in August, up from 2.3 percent in July. UK August retail sales were up a monthly 1.0 percent, the largest increase in four months and higher than 0.6 percent increase in July.

Asia Pacific

Stocks were mixed and remained little changed as investors waited for the Federal Reserve policy decision.

The Shanghai Composite and Hang Seng were both up 0.3 percent. Investors here are optimistic that Beijing will maintain stability in financial markets before next month's key party congress meeting.

The Nikkei edged up 0.1 percent and the Topix added 0.04 point prior to the upcoming Bank of Japan. August merchandise trade data indicated that exports climbed 18.1 percent on the year while imports were 15.2 percent higher. Financial stocks and exporters were mixed after sharp rallies the previous day. Mitsubishi UFJ Financial Group and T&D Holdings were lower while Dai-ichi Life Holdings advanced. Mining and oil stocks outperformed, with Inpex percent, Japan Petroleum Exploration and Idemitsu Kosan higher on the day. Sony Corp declined on a broker downgrade.

The S&P/ASX slipped 0.1 percent while the All Ordinaries were down 2.67 points. Financials and mining stocks came under selling pressure. ANZ, Westpac and NAB were lower as market pricing shifted further towards interest rate tightening. Miners also fell after Chinese steel futures hit their lowest level in almost a month. Rio Tinto and Fortescue Metals Group tumbled.

The Kospi was 0.2 percent lower as investors waited for the FOMC decision. The Sensex was down 1.86 points.

Looking forward

The Bank of Japan will announce its policy decision. The Eurozone posts September flash consumer confidence. In the US, the September Philadelphia Fed outlook survey, August leading indicators and weekly jobless claims, money supply and Fed balance sheet will be released.

*Note — all releases are listed in local time.

Global Stock Markets

Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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