Global shares slip ahead of Fed view on US economic outlook

Global shares mostly fell in muted trading Wednesday as world markets cautiously awaited the US central bank’s latest assessment on the economy.

France’s CAC 40 slipped 0.1% in early trading to 6,048.72, while Germany’s DAX gained nearly 0.1% to 14,568.97. Britain’s FTSE 100 dipped 0.4% to 6,779.67. US shares were set to be little changed with Dow futures at 32,727. S&P 500 futures were less than 0.1% lower at 3,951.12.

Japan’s benchmark Nikkei 225 inched down less than 0.1% to finish at 29,914.33. South Korea’s Kospi slipped 0.6% to 3,047.50. Australia’s S&P/ASX 200 dipped 0.5% to 6,795.20. Hong Kong’s Hang Seng was little changed inching up less than 0.1% at 29,034.12, while the Shanghai Composite was also little changed, but down less than 0.1% at 3,445.55.

Investors are awaiting the Federal Reserve’s economic and interest rate projections, expected later in the day. Economists expect Fed Chair Jerome Powell will try to convince jittery financial markets that the central bank can continue providing support without igniting inflation.

Those worries have recently pushed bond yields higher, sapping buying demand for shares.

The Fed meeting “carries the potential to either allay or heighten some of the market’s recent concern with regard to the soaring bond yields,” said Jingyi Pan, senior market strategist at IG in Singapore.

Jeffrey Halley, senior market analyst Asia Pacific at OANDA said US Secretary of State Antony Blinken’s comments about China, while visiting Japan and South Korea, also dampened regional sentiments.

“The comments suggest that relations between the two superpowers remain as troubled as ever and does not bode well for the meeting tomorrow and Friday between senior officials of both countries. That state of affairs is adding to the glum mood on the China Mainland,” Halley said.

Blinken, after he and Defense Secretary Lloyd Austin met Tuesday with their Japanese counterparts, denounced China, saying, “We will push back if necessary, when China uses coercion or aggression to get its way.”

Investors weighed new economic data Tuesday that showed Americans cut spending last month, partly due to bad weather in wide parts of the country that kept shoppers away from stores, and partly due to December and January stimulus payments running out.

Retail sales fell a seasonally adjusted 3% in February from the month before, the US Commerce Department said. February’s drop followed soaring sales in January as people spent $600 stimulus checks sent at the end of last year.

Investors are betting big that this economic malaise will dissipate as spring arrives and more Americans get vaccinated against the coronavirus. Further, President Joe Biden’s administration started sending out $1,400 stimulus checks to individuals last weekend.

In energy trading, US benchmark crude rose 10 cents to $64.90 a barrel in electronic trading on the New York Mercantile Exchange. It lost 59 cents to $64.80 on Tuesday. Brent crude, the international standard, gained 54 cents to $68.44 a barrel.

In currency trading, the US dollar rose to 109.13 Japanese yen from 108.99 yen. The euro cost $1.1895, down from $1.1903.