Wall Street opens higher as investors await Fed projections

European markets fluctuate between gains and losses

Wall Street opened higher on Wednesday, with Nasdaq hitting another record high, as attention shifted to the Federal Reserve’s first projections on the US economy post-coronavirus outbreak.

The Dow Jones Industrial Average fell 20.41 points, or 0.07 per cent, at the open, while the S&P 500 opened higher by 6.24 points, or 0.19 per cent. The Nasdaq Composite gained 0.59 per cent.

European fluctuated between gains and losses, with the pan-European Stoxx 600 trading flat at 14.45pm.

The FTSE 100 in London was up 0.1 per cent, while the Dax in Germany was 0.3 per cent lower and the French Cac 40 down 0.3 per cent. The Iseq in Dublin was still trading higher, but by less than 0.1 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan, which has galloped 9 per cent higher in June and is 35 per cent above March lows, rose 0.4 per cent. Japan's Nikkei added 0.15 per cent.

"The Fed tonight is a key variable in determining whether this is a pit-stop or U-turn," said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore.

No action is expected from the Fed, but any hint of taking the foot off the pedal could hurt risk sentiment and lift the dollar. More dovishness could have the opposite effect.

Focus is on the Fed’s economic outlook and whether a steepening of the US yield curve during last week’s bond market selloff might prompt intervention to keep long-term borrowing costs down.

"While we expect the Fed to do its utmost to maintain the dovish tone with the possibility of them re-introducing economic projections, and potentially pushing for a more explicit approach to yield curve control, as it stands risk-on moves look stretched," said Henry Occleston, a rates strategist at Mizuho in London.

The MSCI world stock index, up nearly 45 per cent from four-year lows struck in mid-March, also held just below recent three-month highs.

Data showing the sharpest slump in China’s producer prices in four years - pointing to flagging global demand – also served as a reminder of the impact the coronavirus pandemic is having on the global economy.


The Fed’s policy statement is due at 1800 GMT and is followed by a news conference half an hour later.

Speculation that the Fed could take steps to curb the recent rise in bond yields pushed the dollar down.

The dollar index, which measures the greenback’s value against a basket of other major currencies, fell to a fresh three-month low at 96.106.

The US currency was down 0.4 per cent at 107.29 yen, having hit its lowest in around a week and a half. The euro was a touch firmer at $1.1352, while the Aussie dollar last sat at $0.6991, about 0.5 per cent firmer on the day.

US Treasury yields were broadly lower, also reflecting a more cautious tone in world markets with 10-year government bond yields down 2 basis points at 0.80 per cent. Gold was firm at $1,718 per ounce.

Oil prices were on the back foot on renewed concerns about oversupply and underlying economic weakness. Brent crude was last down 1.5 per cent for the session at $40.58 per barrel. UScrude was 1.9 per cent weaker at $38.21 a barrel. – Reuters