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Media stocks jump as mergers expected

Global stocks wavered yesterday on fears of trade tensions and questions about US interest rates, while lower-than-expected inventory data sent oil prices into the black after morning losses.

Investors are awaiting the US Federal Reserve’s 2pm (6pm GMT) decision on monetary policy, with the year’s second interest rate hike almost certain.

But market participants are keen to know how many times the Fed will raise rates in 2018, with market pricing “fairly split between three and four hikes”, Deutsche Bank strategist Jim Reid wrote in a note to clients.

In the uncertainty, Wall Street opened slightly firmer, buoyed by a jump in media stocks after Tuesday’s court ruling allowing AT&T’s $85 billion takeover of Time Warner – a move expected to trigger a wave of mergers.

Shares of the HBO channel owner  jumped about three per cent after the approval, while AT&T dropped 1.6 per cent.

Overall, stock markets were moving up, but tepidly. The Dow Jones Industrial Average rose 18.88 points to 25,339.61, the S&P 500 gained four points to 2,790.85 and the Nasdaq Composite added 42.30 points to 7,746.09.

The FTSEurofirst 300 index rose 0.19 per cent. MSCI’s gauge of stocks across the globe, stagnant near one-month highs for about a week, rose 0.09 per cent.

Equity markets are “finding it difficult to make upward progress despite reasonably good economic data”, said Andrew Milligan, head of global strategy at Aberdeen Standard Investments.

Along with the Fed and other key central bank policy meetings this week, fresh fears of protectionism are weighing on stocks and currencies as the US prepares to unveil more tariffs on China.

Emerging market stocks lost 0.37 per cent, while MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.58 per cent lower. Oil prices, which started the day in the red, rose after a report by the Energy Information Administration indicated US crude inventories fell more than anticipated last week and while petrol and distillate stocks surprised with unexpected declines.

“You tend to want to see draws in petrol early in the summer with driving season, and this is the first number that actually does that... in three weeks,” said Bob Yawger, director of energy futures at Mizuho in New York.

Italian government bonds were in demand after new EU Affairs Minister Paolo Savona said the euro was “indispensable”. His comments – he previously exp-ressed hostile views on the euro – followed statements earlier in the week by Italy’s new coalition government that it had no plans to leave the eurozone.

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