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Stocks keep spirits up before Fed meets

EconomyMar 16, 2021 06:30AM ET
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© Reuters. TV camera men wait for the opening of market in front of a large screen showing stock prices at the Tokyo Stock Exchange in Tokyo

By Ritvik Carvalho

LONDON (Reuters) - World stocks rose on Tuesday, as investors anticipated the U.S. Federal Reserve and other central banks meeting this week will keep policies accommodative to help drive a post-pandemic global economic recovery.

European shares extended a rally that began on Wall Street on Monday and continued into Asia, with the pan-region STOXX 600 index up 0.5%. On Monday, the index touched its highest level in more than a year before ending flat.

Britain's FTSE 100 index rose 0.7%, Germany's DAX 0.6%, France's CAC 40 0.2% and Italy's FTSE MIB index 0.6%.

E-mini futures for the S&P 500 hit a record high before trading flat on the day.

MSCI's All Country World Index, which tracks stocks across 49 countries, rose 0.2% to its highest levels since Feb 25.

An index of Asia-Pacific share markets excluding Japan gained 0.65%, led by a 0.8% jump in Australia's benchmark S&P/ASX 200 index.

Japan's Nikkei 225 gained 0.5% to just below the 30,000 mark. The broader Topix added 0.65%.

China's blue-chip CSI 300 index climbed 0.87% and Hong Kong's Hang Seng gained 0.67%.

"The stock markets have kept their spirits up ahead of tomorrow's important Fed announcement," said Karl Steiner, chief quantitative strategist at SEB.

On Monday, the S&P 500 and Dow Jones Industrial Average both soared on gains in travel stocks as mass vaccinations in the United States and congressional approval of a $1.9 trillion aid bill fueled investor optimism.

Longer-term U.S. Treasury yields slipped further on Tuesday, as the market looked ahead to government debt auctions and the Fed's two-day policy meeting, which will conclude on Wednesday.

The benchmark 10-year yield, which reached a more than one-year high of 1.642% last week, was back at 1.125%.

The earlier surge in yields stemmed from investors speculating that rising inflation expectations could prompt the Federal Open Market Committee to signal it will start raising rates sooner than expected.

"We think the FOMC will have a hard time expressing concern about asset markets with the S&P at an all-time high on 12 March, despite 10Y U.S. Treasury yields at post-February 2020 highs," said analysts Steve Englander and John Davies at Standard Chartered (OTC:SCBFF).

"Focus has been on the FOMC ‘dot plot’ in recent days, but if the FOMC and Fed Chair (Jerome) Powell do not push back against current yield levels, investors are likely to take yields higher as better data arrives."

Graphic: Federal Open Market Committee Projections - https://fingfx.thomsonreuters.com/gfx/mkt/xlbpgxblxvq/Pasted%20image%201615887311998.png

Fed policymakers are expected to forecast that the U.S. economy will grow in 2021 by the fastest rate in decades, as it recovers from a coronavirus-stricken 2020.

The Bank of England also meets this week on Thursday and the Bank of Japan wraps up a two-day meeting on Friday.

On Wall Street, the Dow Jones Industrial Average rose 174.82 points, or 0.53%, to 32,953.46, the S&P 500 gained 25.6 points, or 0.65%, to 3,968.94 and the Nasdaq Composite remained unchanged.

Airline shares rose as the companies pointed to concrete signs of an industry recovery as vaccine rollouts help spur leisure bookings.

The outlook for post-pandemic recoveries continued to diverge between the U.S. and Europe.

President Joe Biden's order to make vaccination available to all adults by May 1 contrasted with stuttering rollouts in Germany, France and elsewhere, where use of the AstraZeneca (NASDAQ:AZN) vaccine has been suspended amid concern over possible side effects.

However, Kyle Rodda, an analyst at IG Markets, said the prospect of a slower economic recovery in Europe didn't appear to be a major handicap for investors.

"It doesn't seem to be the view that this is a real risk," he said. "Investors are wary, but not worried."

In currencies, the U.S. dollar held small gains from overnight, with caution evident ahead of the central bank meetings.

The dollar was largely flat at 109.19 yen, after rising as high as 109.365 on Monday for the first time since June.

The euro was little changed at $1.1930, holding for an eighth session below the $1.20 level.

Bitcoin halted its slide from a record high of $61,781.83 reached on Saturday, last trading 1% higher on the day around $56,250.

U.S. West Texas Intermediate crude for April changed hands at $64.74 a barrel, down 1%. Brent crude futures for May stood at $68.22 a barrel, losing 1%.

Stocks keep spirits up before Fed meets
 

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Comments (12)
Oliver Brecht
Oliver Brecht Mar 16, 2021 2:58AM ET
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Chinese markets are definitely correlated to the Fed ! lol...
Paulo Silva
Paulo Silva Mar 16, 2021 2:18AM ET
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People fail to undertdand this is still a bull market, it will continue to be at least until 2023 !! Ths corrections are hardly significant as a whole !! Buy the dip and enjoy the ride !! We'll maybe see another small correction before end of March and then, April, buckle up !! We're going up and away !!
Dr Gogu
Dr Gogu Mar 16, 2021 1:27AM ET
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Market will rally this week, esp nasdaq.
Veevek Sonawne
Veevek Sonawne Mar 16, 2021 12:56AM ET
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Mrk going to down
Shane Gg
Shane Gg Mar 16, 2021 12:07AM ET
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Gotta love these constant new records being broken when it's really only like a quarter or a half percent on the old records. This is funniest hype on the stock market since Tesla went a full year being overbought and then continued to climb further on nothing but FOMO.
Christos Rammos
Christos Rammos Mar 15, 2021 11:10PM ET
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Bull trap
jamal jamal
jamal jamal Mar 15, 2021 11:09PM ET
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Buy the dip guys, UP we go again
Mario tragik
Mario tragik Mar 15, 2021 10:45PM ET
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ALL my stimmy goes on AAPL and TSLA calls like a true American! USA USA USA!
Matt Kay
Matt Kay Mar 15, 2021 10:45PM ET
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like a true donkey
ECL SALES
ECL SALES Mar 15, 2021 10:21PM ET
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Bull Trap
Biji Rajaku
Biji Rajaku Mar 15, 2021 9:51PM ET
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Whatever the reason, everything is in under control plus in underwear....
Mitchel Pioneer
Mitchel Pioneer Mar 15, 2021 9:18PM ET
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The greatest investment fraud in history magically "rallies" again, as Wall Street draws the financial sword across the throat of the US working class.
Elvis Durant
Elvis Durant Mar 15, 2021 9:18PM ET
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You ain't joking.......Total Farse!
Dave Jones
Dave Jones Mar 15, 2021 9:02PM ET
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rising because it's rising
 
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