World Economy

Global Stocks Struggle Ahead of Fed Decision

Global Stocks Struggle Ahead of Fed DecisionGlobal Stocks Struggle Ahead of Fed Decision

European stock markets retreated from 20-month highs and the dollar inched up on Wednesday as investors pondered the chances of another rise in US interest rates next month ahead of the Federal Reserve’s May statement.

Since December, the US central bank has finally begun to deliver on long-disappointed expectations of a steady rise in borrowing costs and an increase in official rates June is now almost 60% priced in by markets, Reuters reported.

But US economic numbers in the past month have been less convincing, and the latest gains for global share prices look as much the product of an improving recovery in Europe as the US-based optimism that dominated the end of last year.

A surprise fall in iPhone sales in the first quarter and drops in vehicle sales for Ford and General Motors added to nerves about the durability of US growth in the absence of a boost from tax cuts or new public spending.

Falls in the price of copper, iron ore and other metals also underlined growing nerves over China and, with oil prices stuck near recent lows, weighed on Europe’s commodity-heavy indices.

“These numbers point to US consumers becoming more cautious and do seem like a source of some of the weakness today,” said Andy Sullivan, a portfolio manager with GL Asset Management UK in London. “Autos, tech and basic resources are leading Europe lower.”

By 0845 GMT, the STOXX 600 index of leading European shares was down 0.2%. France’s CAC 40 and Germany’s DAX fell 0.3 and 0.2% respectively while the resource-heavy FTSE 100 dipped 0.3%.

After a mixed Asian session, with a number of major markets closed, the MSCI global share index was marginally lower on the day.

Sydney’s S&P-ASX 200 fell 1% to 5,892.30 points and the Shanghai Composite Index declined 0.25% to 3,135.72. India’s Sensex lost 0.1% to 29,902.35 and benchmarks in New Zealand and Jakarta also retreated. Taiwan and Singapore gained. South Korean markets also were closed for a holiday.

The dollar edged up to 112.03 yen from Tuesday’s 111.99 yen. The euro gained to $1.0932 from $1.0929.

US benchmark crude gained 37 cents to $48.03 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged $1.18 on Tuesday to close at $47.66. Brent crude, used to price international oils, rose 42 cents to $50.88 in London. It lost $1.06 the previous session to $50.46.

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