Stock markets around the world mostly dipped yesterday as investors held off from making big bets ahead of the release of minutes from the US Federal Reserve’s latest meeting, though they were not expected to deliver any policy surprises.
The dollar hovered near its lowest level of 2014, while both the euro and the yen were little changed on the day. Gold prices were also near breakeven levels.
In commodity markets, both gold and copper prices were slightly lower on the day. Brent crude was flat while US crude futures rose 0.4 per cent on forecasts of lower crude and oil products stockpiles due to new pipeline capacity and robust winter demand.
Fed Chair Janet Yellen earlier this month indicated that the central bank was inclined to keep tapering its bond purchases, though markets assume a recent run of soft economic data will encourage the Fed to be cautious.
Recent US data, including on the housing and labour markets, has come in below forecasts, though many analysts chalk the weakness up to severe weather and don’t expect the Fed to adjust the slowing of its stimulus programme as a result.
If the central bank were to slow the pace of tapering, it could raise concerns that the economy is too weak to grow without outside assistance.
The Dow Jones industrial average was down 34.61 points, or 0.21 per cent, at 16,095.79. The Standard & Poor’s 500 Index was down 4.46 points, or 0.24 per cent, at 1,836.30. The Nasdaq Composite Index was down 19.65 points, or 0.46 per cent, at 4,253.14.
European shares rose 0.1 per cent while the MSCI World index lost 0.1 per cent.
The benchmark 10-year US Treasury note was up 3/32 in price, with the yield at 2.6979 per cent.
The US dollar index, which measures the dollar against a basket of major currencies, rose 0.1 per cent, after hitting its lowest level in 2014 to date overnight. Both the euro and yen were little changed against the dollar.
“We’ve had nothing but negative economic surprises and the excuse that it is all weather-related is going to terminate very soon,” said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management in New York.
“If this reflects a more secular weakness, the Fed could take a more dovish bent in the near term,” he said.
Dealers have been surprised by the euro’s resilience given speculation the European Central Bank will have to ease policy further to avert the risk of deflation.
“One could expect that if the real economy is getting up and if we see that in Germany wage increases are quite substantial, there might be a certain self-correcting trend in inflation,” ECB member Ewald Nowotny told Reuters in an interview.
“So we will see whether this needs some specific action or whether... there would be a merit for waiting.”