On 19 September, 2017 – Stocks were mixed as investors waited for decisions by the Federal Reserve and the Bank of Japan

Neither is expected to change their respective policy interest rates.
United States
US stocks edged higher Tuesday led by banks, insurers and other financial companies. Technology stocks also helped lift the market, while health care companies lagged the most. The Dow Jones industrials were up 0.2 percent while both the S&P and Nasdaq were 0.1 percent higher. The higher close by the major averages reflected a continuation of the upward momentum seen over the past several sessions. Investors as they usually are before a Federal Reserve announcement were on the sidelines.
The Federal Reserve’s FOMC will deliver an update on the Fed’s view of the economy Wednesday afternoon US ET. Expectations are for the Fed to leave the fed funds range unchanged at 1.0 percent to 1.25 percent. They will also be looking for details on the Fed’s reduction of its balance sheet. Speculation that the Fed will announce plans to unwind its balance sheet of bonds helped lift shares in banks and other financial companies.
Progressive climbed after the insurer reported lower than expected losses from Hurricane Harvey. The company is the second insurer to report losses related to the hurricane, which battered Texas and Louisiana last month, that were far less than financial analysts expected. Rite Aid and Walgreens Boots Alliance slumped after the Federal Trade Commission signed off on a deal that allows Walgreens to buy 2,186 stores for $5.19 billion. That is a smaller deal than the companies originally sought when Walgreens pushed to buy Rite Aid. Verizon and AT&T were higher along with T-Mobile and Sprint. Best Buy declined after forecasting 2021 adjusted earnings well below estimates. Tesla declined after a broker downgrade.
August housing starts increased at an annualized rate of 1.180 million, down from the upwardly revised total of 1.190 million. Permits were up an annualized 1.300 million, up from the upwardly revised total in July of 1.230 million. The decline in starts in part reflects Harvey’s impact on Texas.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$2.50 to US$1,309.60. Copper futures were up 0.1 percent to US$2.97. WTI spot crude was down 29 US cents to US$49.62. Dated Brent spot crude was down 25 US cents to US$55.23. The US dollar was up against the yen and Swiss franc. It declined against the euro, pound and the Canadian and Australian dollars. The Dollar Index was down 0.3 percent. The yields on both the US Treasury 30 year bond and 10 year note were up 1 basis point to 2.81 and 2.24 percent respectively.
European markets
After fluctuating between small gains and losses during Tuesday trading, the indices advanced for the day. Investors exercised caution prior to Wednesday’s Federal Reserve monetary policy decision. The FTSE was up 0.3 percent, the CAC added 0.2 percent and the SMI was 0.5 percent higher. The DAX managed to add 2.4 points.
Hugo Boss declined on a broker downgrade. In London, Ocado Group retreated after it reported higher sales in its third quarter, but signaled a further hit to earnings from costs of setting up new distribution centers. Supermarkets Sainsbury’s, Morrisons, Tesco and Marks & Spencer whose bricks-and-mortar business models have been squeezed by online delivery services like Ocado, advanced. Ryanair rose after halting talks on a flight connection agreement with Norwegian Air Shuttle.
Heineken declined in Amsterdam after Mexico’s Femsa said it had sold a 5.24 percent stake in the brewer for €2.5 billion. Solvay declined in Brussels. The multi-specialty chemical company entered into a binding agreement with BASF for the sale of its Polyamides business for an enterprise value of €1.6 billion. Lonza and Logitech advanced. Swatch Group finished higher on a broker upgrade. Novartis, Roche and Nestlé were higher. Both HSBC and Lloyds advanced.
The euro area current account surplus increased in July on higher primary income. The current account surplus increased to a seasonally adjusted €25.1 billion in July from €22.8 billion in June. Germany’s ZEW survey for September indicated that economic expectations climbed 7 points to 17.0 while current conditions edged up to 86.7.
Asia Pacific
Asian stock indices retreated but Japanese shares surged as traders returned to their desks after a long holiday weekend. Underlying sentiment remained cautious as investors waited for the Federal Reserve and Bank of Japan policy announcements.
The Shanghai Composite eased 0.2 percent as liquidity worries resurfaced before the National Day holiday. The Hang Seng declined 0.4 percent. Investor risk appetite has been curbed by a mixed bag of recent China economic data showing signs of a slowdown in some areas of the economy, such as fixed-asset investment, but resilience elsewhere, such as stronger-than-expected lending. There are emerging concerns over seasonal liquidly stress toward the end of the third quarter, due to the week-long National Day holiday and central bank health checks on commercial banks.
The Nikkei and Topix advanced 2.0 percent and 1.8 percent respectively as the US dollar rose to an eight-week high against the yen prior to the FOMC meeting that gets underway later in the global market day. Prime Minister Shinzo Abe is considering calling a snap election for as early as next month to take advantage of his improved approval ratings and disarray in the main opposition party, according to government and ruling party sources. Financials closed broadly higher, with Mitsui Financial Group, Nomura, Mitsubishi UFJ Financial and Sompo Holdings rallying. Exporters Nissan Motor, Panasonic and Toyota jumped. Nintendo soared to hit a nine-year high after a broker upgrade.
Both the S&P/ASX and All Ordinaries slipped 0.1 percent even though housing and consumer confidence data painted a positive picture of the economy and minutes from the Reserve Bank’s September 5 meeting came broadly in line with expectations. Banks were mostly lower even though US stocks indices hit record highs overnight bolstered by financials. Miners Rio Tinto and Fortescue Metals Group eked out modest gains as aluminum and copper prices strengthened.
The Kospi declined 0.1 percent as investors booked some profits after recent sharp gains. The Sensex also lost 0.1 percent.
Looking forward
Japan posts August merchandise trade balance. Germany reports August producer prices and the UK reports retail sales. In the US, August existing home sales will be released. The Federal Reserve announces its monetary policy decision followed by chair Janet Yellen’s press conference.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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