ET:World shares dip, dollar steady before Fed meeting
LONDON: World shares and oil dipped and the dollar held firm on Wednesday in muted trade as investors steered clear of big bets ahead of a Federal Reserve meeting and data offering a window on the health of the US economy.
Global growth in the months ahead is pegged to the rate of recovery in the US economy and investors are worried an early withdrawal of support from the US central bank by tapering back in its bond purchases could threaten the outlook.
"Traders globally seem to be in a wait-and-see mode before the outcome of the Fed's meeting on the timing of quantitative easing tapering," said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management in Tokyo.
A fall in retail sales in Europe's economic powerhouse Germany added to investor concerns there, leading the broad FTSEurofirst 300 index down 0.3 per cent and the euro zone's blue-chip Euro STOXX 50 index down 0.4 per cent in early trade.
Ahead of the Fed policy statement due at 1800 GMT, the dollar index, which tracks the greenback's performance against a basket of major currencies, had inched up 0.1 per cent to 81.877.
The index had hit a five-week trough earlier this week as investors bet the Fed would reassure markets that interest rates would remain low for a long time even if it started scaling back stimulus this year.
Meetings of other major developed world central banks in coming days, including the European Central Bank on Thursday, and the key US payrolls report on Friday are also prompting investors to stay on the sidelines.
Following a weak session for equities in Asia, the MSCI world equity index was down 0.25 per cent. Chinese stocks rose 0.5 per cent after the government pledged to keep growth stable in the second half of the year.
Brent crude prices eased 0.2 per cent to around $106.70 a barrel, extending a 0.6 per cent decline on Tuesday but remain up 4.5 per cent this month and on course for their best monthly gain since August last year.
Gold gained 0.5 per cent. It is up 8.2 per cent so far this month, on track to snap a three-month losing run and mark its biggest monthly rise since January 2012, but it is down 20 per cent since the beginning of 2013.
German bonds were lower though traders said this was largely due to investors making way for an upcoming sale of new 30-year government bonds. The selling lifted the current German 30-year yield by 2 basis points to 2.5 per cent.
