Global stocks were mixed on Wednesday morning, ahead of the monetary policy statement from the U.S. Federal Reserve.
U.S. stock index futures were higher with about 45 minutes before markets open, suggesting that stocks will rise at the start of trading. Futures for the Dow Jones industrial average were up 40 points or 0.4 per cent. Futures for the broader S&P 500 were up 4 points or 0.4 per cent.
Both indexes were hit hard on Tuesday, following disappointing existing home sales in the United States, along with a court ruling that blocked the moratorium on deepwater drilling in the Gulf of Mexico. The S&P 500 fell 1.6 per cent, for its biggest setback in two weeks. The decline also took the index below its 200-day moving average, which is considered a bearish development by some investors.
In Europe, the U.K.'s FTSE 100 and Germany's DAX index were down 0.2 per cent on Wednesday afternoon. In the euro zone, manufacturing and services activity slowed in June, contributing to ongoing concerns that the economic recovery is already stumbling even as governments there get serious about cutting their spending to reduce their budget deficits.
But the big news of the day will likely come from the Fed, even though economists aren't expecting much in the way of a major change in its policy statement. A rate hike has been ruled out, and most observers believe the Fed will stick to its earlier language that says low interest rates are needed for an extended period of time. However, while the Fed sounded optimistic about the economic recovery last time, it will be interesting to see if it acknowledges recent disappointing economic data, which include sluggish employment growth.
David Berman