Coronavirus: Stocks tread water ahead of Fed meeting

·Finance and policy reporter
·2 min read
A man wearing a protective mask walks in Canary Wharf, during rush hour, in London, Wednesday March 25, 2020. For most people, the coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. (Victoria Jones/PA via AP)
Canary Wharf in London. Photo: Victoria Jones/PA via AP

European markets tread water in early trading on Wednesday, with investors waiting for a Federal Reserve meeting in the US later in the day.

The Fed had already announced on Tuesday (28 July) it would extend most of its emergency programmes until the end of the year as its two-day policy meeting got underway in Washington, DC.

The central bank’s chair Jerome Powell will hold a press conference later on Wednesday. Naeem Aslam, chief market analyst at Avatrade, said on Tuesday (28 July) the meeting made traders “hesitant” about placing bigger bets.

Pressure is growing on the Fed to sustain its support for stocks, Aslam added, but Deutsche Bank analysts said in a note on Wednesday they did not expect any “significant” policy announcements until later this year. Powell could instead “set the stage for a more consequential announcement in September,” they added.

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Trading was fairly muted in Europe. The FTSE 100 (^FTSE) opened flat and the DAX (^GDAXI) lost 0.1%, though the CAC 40 (^FCHI) gained 0.5%.

But US futures pointed to a slightly higher open. S&P 500 futures (ES=F) were up 0.2%, Dow Jones futures (YM=F) up 0.1%, and Nasdaq futures (NQ=F) up 0.4%.

"Some pockets of the market are looking for the forward guidance to be a bit bolder in a dovish direction," said Imre Speizer, currency analyst at Australian bank Westpac, according to Reuters.

There are concerns among investors about the future of US fiscal support however, with Republicans proposing to slash a weekly $600 (£466) unemployment benefit to $200 after it expires on Friday. The crisis measure is seen to have supported consumer spending in recent months.

It follows a mixed trading session overnight in Asia. Japan’s Nikkei (^N225) lost 1.2% and Australia’s ASX 200 (^AXJO) fell 0.2%, but Shanghai Composite (000001.SS) rose 0.7%, and the Hong Kong Hang Seng (^HSI) rose 0.5%.