On 26 July, 2017 – Global stocks were mostly higher Wednesday as investors waited for the FOMC announcement

Favorable earnings reports also lifted investor morale.
United States
US stocks advanced Wednesday but gains eroded in late afternoon after the FOMC announcement. The Dow Jones industrials were up 0.45 percent, the S&P was virtually unchanged (up 0.70 point) and the Nasdaq added 0.2 percent. Boeing and AT&T rose sharply after posting strong second-quarter results. Energy companies rose with the price of oil. Treasury yields retreated after the Federal Reserve held short-term interest rates steady.
Boeing reported second quarter net income of $1.76 billion, after suffering a loss a year earlier. The company posted revenue of $22.74 billion. Boeing expects revenue of $90.5 billion to $92.5 billion. Ford Motor had a better-than-expected second quarter despite lower sales and upheaval in its executive ranks. Net income rose 4 percent to $2 billion, thanks in part to a change in the company’s tax rate and a strong performance from its credit arm. One-time items included a $248 million charge as the company shifted production of the Ford Focus from Mexico to China. Ford’s automotive revenue was $37 billion. Total revenue rose 1 percent to $39.85 billion.
AT&T jumped after reporting stronger than expected second quarter profit. The phone and video company also said it is on track to complete its purchase of Time Warner before the end of the year. That would further diversify AT&T’s business as competition in the wireless industry gets more intense. Verizon also advanced. Health care stocks declined as investors were mostly disappointed with reports or forecasts from Amgen, Baxter International, and Thermo Fisher. Universal Health Services dropped after it cut its outlook in the wake of a weak second quarter. Advanced Micro Devices soared after it raised its forecast for full-year revenue growth and reported stronger-than-expected results for the second quarter.
As expected, there were no surprises in the Federal Reserve’s announcement. The benchmark fed funds rate was unchanged in a range between 1 percent and 1.25 percent. It also said that the downsizing of the Fed’s bond holdings will begin “relatively soon.” The FOMC noted the weakness of inflation, but said it expected a rebound. The Fed remained officially sanguine about the recent weakening of inflation. However, rather than raising its fed funds rate, the Fed is now expected to announce that it will begin to reduce its $4 trillion in Treasury securities and mortgage-backed securities as part of its campaign to reduce borrowing costs for businesses and consumers as soon as September.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$6.30 to US$1,248.10. Copper futures were up 0.8 percent to US$2.87. WTI spot crude was up 84 US cents to US$48.73. Dated Brent spot crude was up 75 US cents to US$50.95. The US dollar was down against its major counterparts including the yen, euro, pound and the Canadian and Australian dollars. The currency was unchanged against the Swiss franc. The Dollar Index dropped 0.6 percent. The yield on US Treasury 30 year bond was down 2 basis points to 2.89 percent while the yield on the 10 year note was down 3 basis points to 2.29 percent.
Europe
Stocks advanced Wednesday thanks to positive earnings reports and positive UK gross domestic product data for the second quarter. However, investors were cautious prior to the expected Federal Reserve announcement, which occurred after the European close. The FTSE was up 0.2 percent, the DAX added 0.3 percent and both the CAC and SMI advanced 0.6 percent.
Metro jumped after saying it would buy a large stake in French books and consumer electronics chain Fnac Darty. Puma was higher after lifting its fiscal year 2017 forecast. Peugeot climbed after its sales and profit figures for the first-half topped expectations. Thales gained after it reported a better-than-expected increase in first-half operating profit and said it was in constructive talks with Airbus about the latter’s bid to boost its presence in the services area. Acacia Mining slumped to extend declines for a seventh straight session on brokerage downgrades. Fresnillo was up after the miner reaffirmed its 2017 production guidance as it reported higher silver and gold output for the second quarter. Anglo-American also advanced.
ITV increased after releasing its interim statement for the six months to June 30. Compass Group advanced after it reported that its organic revenue growth in the third quarter was 3.9 percent. Lonza rallied after it reported an increase in first-half profit and confirmed its 2017 outlook. Aryzta climbed while Lindt & Sprüngli rebounded from Tuesday’s decline following its disappointing financial report. Novartis increased on a broker upgrade. Both Nestlé and Roche were higher. Julius Baer declined as investors took profits following the company’s strong report at the start of the trading week. Tullow Oil was higher thanks to increased output from new fields.
UK first estimate of second quarter GDP was up 0.3 percent on the quarter after edging up 0.2 percent in the first quarter. On the year though, GDP was up 1.7 percent down from first quarter’s 2.0 percent gain.
Asia Pacific
Most Asian stocks advanced as higher commodity prices and upbeat US earnings news helped keep investor sentiment buoyant before the Federal Reserve’s monetary policy decision later in the global market day.
The Shanghai Composite edged up 0.1 percent on concerns over further regulatory tightening after the China Securities Regulatory Commission said it would maintain “normalization” of initial public offerings. The Hang Seng added 0.3 percent.
The Nikkei was up 0.5 percent and the Topix gained 0.2 percent as the US dollar extended an overnight rally against the yen and long-dated U.S. Treasury yields jumped after the US Senate Republicans narrowly agreed to open debate on healthcare reform. Exporters closed mostly higher. Toyota Motor and Sony advanced. Toshiba rallied before its decision to consider offers for its chip unit. Mitsubishi Motors jumped on better than expected first quarter results. Komatsu and Hitachi Construction Machinery rallied after Caterpillar beat expectations and raised its full-year forecast for the second time, citing global strength and particularly a rebound in China.
The S&P/ASX rallied 0.9 percent and the All Ordinaries added 0.8 percent. Commodities inched higher and a cooling inflation rate dampened market expectations for a rate increase in the near term. Second quarter consumer prices gained 0.2 percent on the quarter and 1.9 percent on the year and lower than first quarter increases of 0.5 percent and 2.1 percent. Origin Energy, WorleyParsons, Oil Search, Santos and Beach Energy rallied as oil extended overnight gains. BHP Billiton and Rio Tinto climbed along with OZ Minerals after copper prices rose to their highest level in more than two years.
The Kospi retreated 0.2 percent. The Sensex added 0.5 percent.
Looking forward
The Eurozone posts June M3 money supply. UK July CBI distributive trades will be released. In the US, June durable goods orders and international trade in goods will be released along with weekly jobless claims, money supply and Fed balance sheet.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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