Global stocks and dollar subdued as Fed,
BOJ meetings begin
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[September 20, 2016]
By Marc Jones
LONDON (Reuters) - Shares hit pause and the dollar lost ground against
the yen on Tuesday, as investors awaited the outcomes of Federal Reserve
and Bank of Japan meetings that will both conclude on Wednesday.
Nagging doubts about the firepower left available to top central banks
and a slip in oil prices made for another subdued start in Europe as the
STOXX 600 <.STOXX> dipped in and out of the red after seven falls in the
last 10 days.
Industrial firms climbed while oil and gas <.SXEP> was the weak spot.
Crude prices slipped after major producer Venezuela, itself in a deep
economic crisis, said oil markets were effectively 10 percent
oversupplied. [O/R]
The yen <JPY=> was creeping higher in the currency markets, meanwhile
amid speculation the Bank of Japan may do little more than tinker with
its stimulus program and that the Federal Reserve was likely to stay
guarded about its rate hike plans.
From Commerzbank in Frankfurt, Esther Reichelt said she expected a quiet
day, though thin trading volumes could lead to some exaggerated moves
not driven by fundamental factors.
![](http://archives.lincolndailynews.com/2016/Sep/20/images/ads/current/culligan_sda_daily_FESTIVALS_2016.png)
"Everybody is just waiting for the BOJ and the Fed – why do anything
today?" she said. "Everyone has already positioned for these events and
there is no new information that could give them a reason to
reposition."
The yen was changing hands at 101.645 yen <JPY=>. It has risen almost 20
percent over the past 12 months despite the BOJ's best efforts to weaken
it. The euro <EUR=> was also up at$1.1190, though the pound <GBP=>
dipped to $1.3008.
The pre-BOJ and Fed caution kept Europe's bond market moves small too,
although longer-dated euro zone government yields edged lower with the
BOJ expected to try to lever investors away from its longer-maturity
bonds.
The yield on 30-year German Bunds <DE30YT=TWEB> fell 5 basis points to
0.60 percent, and there were similar moves on Dutch, Finnish, French and
Spanish 30-year government bonds. [GVD/EUR]
Other euro zone bond yields also fell, if not quite so sharply.
Germany's 10-year Bund <DE10YT=TWEB>, the region's benchmark bond,
dropped 1.8 bps, turning back into negative territory while Portugal saw
a second day of outperformance.
European tension over the UK's vote to leave the EU and a flood of
immigration has also continued to simmer.
British Prime Minister Theresa May met U.S. business chiefs from firms
including Goldman Sachs, IBM and Amazon on Monday in New York to try and
reassure investors, while German leader Angela Merkel appeared rueful
over the refugee crisis.
"If I could, I would turn back time by many, many years," Merkel said,
sounding particularly somber.
EMERGING DRAMA
Despite the holding pattern in major markets, plenty of action loomed in
emerging markets.
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![](../images/092016pics/news_m21.jpg)
A man looks at an electronic board showing the Japanese yen's
exchange rate against Euro outside a brokerage in Tokyo, Japan, July
6, 2016. REUTERS/Issei Kato
![](http://archives.lincolndailynews.com/2016/Aug/26/images/ads/current/rohlfs_lda_051513.png)
Hungary's central bank was expected to stick to its unconventional
easing policy following a surprise S&P upgrade to investment grade
on Friday that has bolstered its high flying stock <.BUX> and bond
markets and the forint <EURHUF=D3>.
Nigeria, which in contrast was downgraded on Friday, also has a
central bank meeting. A Reuters poll shows it is expected to stay on
hold before hiking interest rates later in the year. Its finance
minister, though, made a strident call for a cut on Monday.
In Asia overnight, MSCI's broadest index of Asia-Pacific shares
outside Japan <.MIAPJ0000PUS> slipped 0.1 percent.
Australian shares <.AXJO> finished slightly higher. The Australian
Securities Exchange opened without incident on Tuesday after
technical faults caused extensive disruptions on Monday.
Japan's Nikkei <.N225> erased its early gains to end 0.2 percent
lower as trading resumed after a public holiday on Monday. Tokyo
markets will also be closed on Thursday, with the BOJ meeting
sandwiched in between.
Oil slipped back to $45.79 per barrel having briefly rallied on
Monday on Venezuela's bid to talk up a potential OPEC output freeze,
though that soon fizzled on indications that U.S. crude stockpiles
had risen again last week. [O/R]
Gold <XAU=> though added 0.2 percent to $1,315.90 an ounce, on
expectations that the Fed will stand pat on rates when it ends its
two-day meeting on Wednesday. [GOL/]
![](http://archives.lincolndailynews.com/2016/Sep/20/images/ads/current/modern_brake_sda_daily_fallfest_2015.png)
EMini futures for the S&P 500 <ESc1> also edged up 0.2 percent,
after major U.S. indexes ended Monday's choppy session nearly flat.
Global markets have been blowing hot and cold in recent weeks over
the Fed's intentions, which remain far from clear after both hawkish
and dovish comments from several Fed officials.
"It's a lot of uncertainty, leading into the Fed," said Jennifer
Vail, head of fixed income research at U.S. Bank Wealth Management
in Portland, Oregon.
(Additional reporting by Jemima Kelly; Editing by Hugh Lawson)
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