On 17 September, 2015 – Global markets were mixed as investors awaited US interest rate announcement

The Federal Reserve left its policy interest rate range at zero to 0.25%. Global considerations were given as reasons the FOMC left its policy unchanged. Trading was subdued in Asia and Europe — they were closed prior to the announcement. US shares were volatile after the announcement.
United States
After turning in a lackluster performance for much of the trading session, stocks were volatile following the Federal Reserve’s monetary policy announcement. At day’s end, the Dow Jones industrials were down 0.4% and the S&P lost 0.3%. The Nasdaq however, managed to edge up 0.1%.
United Continental led the airline sector higher amid indications the company will benefit from an extension of the United MileagePlus credit card program. Biotechnology, utilities, and commercial real estate stocks also managed to finish the trading session firmly in positive territory. On the other hand, financial stocks came under pressure late in the session.
The Federal Reserve opted to keep its policy fed funds interest range at zero to 0.25%. Opinion had been split on whether the Fed would increase rates given the unsettled global economy. In the end, global considerations made the difference. Unsettled global financial markets combined with waning growth in China kept policy unchanged. The vote was nine to one with Richmond Fed President Jeffrey Lacker voting for a 25 basis point increase.
According to the announcement, labor market improvement was described as solid with inflation expected to remain near recent lows before gradually moving to 2% in the medium term. But the statement warned that global events may “restrain” economic activity. The FOMC noted that both the current economic pace and the outlook are moderate. Business investment got an upgrade to moderate from soft. Household spending was also described as moderate with housing described as improving. But net exports, in what is a reflection of the global troubles, are still described as soft.
The statement repeats that energy price declines continue to hold down inflation but new threats to near-term inflation were cited — these are global economic and financial developments the Fed says it is “monitoring”. There was no change in what will trigger the eventual interest rate increase. It will turn on “some further improvement” in the labor market and confidence that inflation is moving to 2%. The Fed repeats its assurance that it will take a “balanced” approach in the removal of stimulus.
Gold at the afternoon London fixing was down 10 US cents to US$1,117.50. Copper futures were up 0.4% to US$2.46. WTI spot crude was down 41 US cents to US$46.74. Dated Brent spot crude was down 64 US cents to US$49.11. The US dollar was up against the Australian dollar. It was virtually unchanged against the Canadian dollar. However, it declined against the euro, yen, pound and the Swiss franc. The Dollar Index was down 1.1%. The yield on US Treasury 30 year bond was down 7 basis points to 3.01% while the yield on the 10 year note declined 9 basis points to 2.20%.
Europe
Stocks were mixed Thursday with the FTSE and SMI retreating 0.7% and 0.2%, respectively, while the CAC added 0.2% and the DAX was virtually unchanged. Markets here were closed prior to the FOMC announcement. The mood among investors was one of caution with analysts divided on whether the Fed will decide to raise interest rates or hold off until December.
The Swiss National Bank left its target range for 3-month CHF LIBOR at minus 1.25% to minus 0.25% with the deposit rate pegged at minus 0.75%. The SNB vowed to remain active in the foreign exchange market despite recent depreciation of the franc. Due to renewed decline in oil prices, negative inflation is forecast to be deeper than the bank estimated in June.
Utilities including RWE and E.ON rebounded. Shares of Adidas increased. In Paris, Renault and Peugeot advanced. In London, Merlin Entertainments was down after the company reported that its total revenue growth for the 36 weeks ended September 5 was 2.2%. Glencore retreated on reports that it is in talks to sell portions of the future production of three South American copper mines to some Canadian companies. Other mining stocks were also under pressure including Antofagasta, Fresnillo, Rio Tinto and Anglo American.
Ocado Group surged on a broker upgrade. Premier Farnell after first half profit before tax fell. The company also announced a reduction in dividend. Phoenix Group advanced. The firm has been evaluating Guardian Financial Services as part of an on-going sale process for the business. Altice gained after the company and Cablevision Systems entered into a definitive agreement for Altice to acquire Cablevision in a deal with an enterprise value of US$17.7 billion.
Asia Pacific
Most Asian markets advanced, encouraged by gains in US trading on Wednesday. The odds of a September Fed rate increase were reduced following the recent volatility in the global markets and especially in China, the debt travails of Europe and the mediocre global economic recovery.
The Nikkei was up 1.4% thanks to the weakening yen. The index opened higher and moved roughly sideways for the rest of the trading session. A majority of stocks advanced in the session, led by export stocks, although pharmaceutical, financial, construction machinery and utility stocks came under selling pressure. The August merchandise trade deficit was a greater than anticipated ¥569.7 billion, much larger than July’s revised deficit of ¥268.4 billion. It was the fifth consecutive month that the balance was negative. On the year, exports were up 3.1% while imports retreated 3.1%. Expectations were for an increase of 4% for exports and a decline of 2.2% for imports. Stocks brushed off Standard & Poor’s downgrade late Wednesday of Japanese government debt, citing the country’s weak growth. S&P is the third of the three major ratings firms to do so. Foreign investors sold a net ¥1.4 trillion (US$12 billion) of Japanese stocks last week, the largest amount since data from Japan’s finance ministry became available in 2005.
The Shanghai Composite lost 2.1% with most of the drop coming in the last half hour of trading while the Hang Seng retreated 0.5%. Beijing backed funds, which are known to operate in the afternoon, did not appear to be present in the domestic market, sparking sales by investors. Chinese markets have seen frequent late-session surges or drops recently. The market also continues to be plagued by uncertainty over how aggressively the government wants to clamp down on illegal trading and what it deems “abnormal” practices.
Both the S&P/ASX and All Ordinaries added 0.9%. Resource stocks led the gains. The Kospi edged up 0.1%. Markets in India were closed for a holiday.
Global Stock Market Recap

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
Canada posts its August consumer price index. In the US, August leading indicators will be released along with the weekly Baker Hughes rig count.
*Note — all releases are listed in local time.