Gold prices edge lower; heading for weekly losses ahead of U.S.-Russia talks
* Oil price stabilises as Saudi Arabia restores supply
* Investors expect Fed to cut rates by 25 basis points
* Treasury yields slip; dollar rises vs yen
* Wall St edges lower as FedEx profit warning hurts
(Updates throughout with open of U.S. markets, changes
dateline; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Sept 18 (Reuters) - Stocks around the world edged
lower on Wednesday and the U.S. dollar crept up as investors
waited for the U.S. Federal Reserve's decision on interest rates
later in the day.
Oil prices cooled as Saudi Arabia's pledge to quickly
restore production eased worries over supply.
The MSCI world equity index .MIWD00000PUS , which tracks
shares in 47 countries, fell 0.16%.
Deep disagreements within the Federal Reserve over the
economic outlook and how the U.S. central bank should respond to
it is not expected to stop policymakers from cutting interest
rates as a two-day meeting concludes on Wednesday. While a 25-basis point rate cut by the Fed is widely
expected, investors are looking to its statement after the
meeting and economic projections for clues regarding future
monetary policy moves.
Investors expect Chairman Jerome Powell to explain the Fed's
position at a news briefing after the rate decision.
"The interesting aspect for me will be how Chair Powell
characterizes recent strength in the data without sounding
hawkish at the same time, because they do want to keep the door
open for more cuts," said Subadra Rajappa, head of U.S. rates
strategy at Societe Generale in New York.
On Wall Street, stocks edged lower, hurt by economic
bellwether FedEx Corp FDX.N 's warning on full-year profit.
The Dow Jones Industrial Average .DJI fell 67.61 points,
or 0.25%, to 27,043.19, the S&P 500 .SPX lost 8.22 points, or
0.27%, to 2,997.48 and the Nasdaq Composite .IXIC dropped
25.87 points, or 0.32%, to 8,160.15.
European shares steadied after early declines, as technology
shares helped offset losses in luxury goods. The pan-European
STOXX 600 index .STOXX was 0.07% higher.
Oil prices retreated, extending the previous day's declines
after Saudi Arabia said it would quickly restore full production
following weekend attacks on its facilities. Tension in the Middle East remained elevated, however, after
Saudi Arabia said it would provide evidence on Wednesday linking
Iran to the attacks. The United States had already said it
believed the attacks against the world's top oil exporter
originated in southwestern Iran. U.S. crude CLc1 fell 1.15% to $58.66 per barrel and Brent
LCOc1 was last at $64.14, down 0.64% on the day.
In FX markets, the dollar rose to trade near a seven-week
high against the yen. JPY= Meanwhile, U.S. Treasury yields fell, with Benchmark 10-year
notes US10YT=RR were last up 16/32 in price to yield 1.7578%,
down from 1.814% on Tuesday.
Possibly further complicating the Fed's discussions,
short-term U.S. interest rates shot up this week, with overnight
repo rates rising to 7%, due largely to seasonal factors such as
huge payments for taxes and bond supply. That prompted the New York Fed to conduct its first repo
operation in more than a decade to inject funds to stressed
money markets. The New York Federal Reserve said late Tuesday it would
conduct a repurchase agreement operation early on Wednesday "in
order to help maintain the federal funds rate within the target
range of" 2.00% to 2.25%. Gold consolidated around $1,500 on Wednesday, keeping to a
$3 range ahead of the Fed decision.
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>