European markets opened lower on Wednesday, before the US Federal Reserve’s announcement later in the day.
The FTSE 100 (^ FTSE) and the Continental Stoxx 600 (^ STOXX) were trading down 0.1% earlier in the day in London, while the DAX (^ GDAXI) fell 0.3% in Frankfurt. CAC 40 (^ FCHI) rose 1.1% in Paris, however.
The world’s most important central bank opened a two-day meeting on Tuesday, with lawmakers hoping to keep rates close to zero.
Few changes are expected in his policy statement, with attention likely to focus on President Jerome Powell’s comments on future asset purchases.
Atlanta Fed President Raphael Bostic “broke ranks” earlier this month, suggesting that asset purchases could be reduced later this year and rates would increase later next year, noted Michael Hewson, chief analyst market share of CMC Markets UK.
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“Fed officials will need to be very cautious in creating a situation where markets start to price in a rage if the US central bank is preparing the ground for a possible tightening of monetary policy,” said Hewson.
Futures pointed to a mixed opening for US equities, after declines on Wednesday. S&P 500 (ES = F) futures fell 0.2%, Dow Jones (YM = F) fell 0.2% and high-tech Nasdaq futures (NQ = F) rose 0.4%.
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This happened after Microsoft’s earnings exceeded expectations, with a 17% jump in second quarter revenue to $ 43 billion and profits jumping 33% to $ 15.5 billion. Facebook and Apple report still on Wednesday.
Investors in Europe were assessing the impact of government measures to contain COVID-19, as well as events in the Atlantic.
Speculation is growing about a third imminent national blockade in France, with increasing pressure on the government to act as hospitalizations peaked eight weeks on Tuesday.
The government hopes an evening curfew will reduce infection rates, but some expect tougher measures this weekend.
Meanwhile, the official number of deaths from coronavirus in Britain exceeded 100,000 on Tuesday, the fifth largest number in the world and more than civilian casualties in World War II.
The government is considering a forced quarantine for newcomers to the UK, as concerns about new variants of the virus grow.
In Asian markets overnight, Japan’s Nikkei (^ N225) was up 0.3% and China’s Shanghai Composite (000001.SS) was up 0.1%.
But Hong Kong’s Hang Seng (^ HSI) fell 1.5%, and the South Korean KOSPI (^ KS11) lost 0.6%.
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