Fannie Mae, Freddie Mac shares tumble after conservatorship comments
(Adds oil, gold settlement prices, Fed projection on interest
rates)
* Federal Reserve projects no rate hikes indefinitely
* Investors wary, expect delay as U.S.-China trade deadline
nears
* Pound slips as projected Conservative majority shrinks
* Saudi Aramco gains 10% after record IPO
By Herbert Lash
NEW YORK, Dec 11 (Reuters) - Global equity markets rose on
Wednesday after the Federal Reserve indicated interest rates
would remain on hold for some time - a positive for risk assets
- while oil prices fell after data showed an unexpected increase
in U.S. crude inventories.
New projections showed 13 of the U.S. central bank's 17
policymakers foresee no change in rates until at least 2021 as
moderate economic growth and low unemployment are expected to
continue through next year's presidential election. That outlook nudged stocks on Wall Street higher as
investors awaited a decision on whether U.S. President Donald
Trump would allow his promised new tariffs on almost $160
billion of Chinese goods to go forward on Sunday.
The projection of no rate hikes for the foreseeable future
is phenomenal when U.S. monetary policy over the last few
decades is considered, said Kristina Hooper, chief global market
strategist at Invesco in New York.
"We shouldn't treat that as boring or uneventful; this is
actually very important. The bar is very high for any rate
hikes," she said.
Hooper said the Fed is the key factor that has been driving
the stock market, in addition to U.S.-China trade relations that
have been center stage for markets in recent weeks as
negotiators try to hammer out a "phase one" deal.
"The Fed decision to sit on its hands and its outlook for
2020 should be positive for the stock market," she said.
MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 0.43%, while the pan-European STOXX 600 index .STOXX
rose 0.22%.
On Wall Street, the Dow Jones Industrial Average .DJI rose
25.98 points, or 0.09%, to 27,907.7. The S&P 500 .SPX gained
9.56 points, or 0.31%, to 3,142.08 and the Nasdaq Composite
.IXIC added 38.80 points, or 0.45%, to 8,654.98.
The 17-month trade war has roiled capital markets and
crimped global growth, noticeably in China. Paramount in
investors' minds is the looming Dec. 15 U.S. deadline on
tariffs, with no immediate clarity on what the decision will be.
After U.S. stocks set new highs two weeks ago and MSCI's
global gauge of equity performance came within two points of an
all-time peak, stocks slid.
"The market's waiting for Godot, waiting on the tariffs,"
said Tim Ghriskey, chief investment strategist at Inverness
Counsel in New York.
The White House's top economic and trade advisers are
expected to meet with Trump in coming days on a decision, a
source told Reuters.
Confidence has grown as Sunday approaches that Trump will do
something to keep the trade talks on track, which has increased
risk-on sentiment in the market, Ghriskey said.
Jamie Dimon, chief executive at JPMorgan JPM.N and
chairman of The Business Roundtable, a trade group of top U.S.
CEOs, said he expected a phase-one U.S.-Sino trade deal to be
finalized and said not doing so would be "negative" for markets.
Gold rose and extended gains during comments by Fed Chair
Jerome Powell, while the U.S. dollar trended lower.
U.S. gold futures GCv1 settled 0.5% higher at $1,475.
Investors also await the first European Central Bank meeting
with Christine Lagarde as president on Thursday, as well as a
general election in Britain that could determine the fate of the
country's exit from the European Union.
The dollar index .DXY fell 0.35%, with the euro EUR= up
0.38% to $1.1134. The Japanese yen JPY= strengthened 0.13%
versus the greenback at 108.58 per dollar.
The British pound GBP=D3 , a high-flier of late, dropped
from a seven-month peak after an opinion poll projected a
narrower-than-expected victory for the Conservative party in the
UK election.
Benchmark 10-year U.S. Treasury notes US10YT=RR rose 11/32
in price to yield 1.7931%.
In the Middle East, Saudi Aramco 2222.SE shares surged 10%
above their initial public offering price on their first day of
trading. That gave the state-controlled oil company a market
value of about $1.88 trillion, making it the world's most
valuable listed company.
Oil prices fell after U.S. crude stocks clocked a surprise
rise in the most recent week while gasoline and distillate
inventories also rose, data from industry group the American
Petroleum Institute shows.
Brent futures LCOc1 settled down 62 cents at $63.72 a
barrel. West Texas Intermediate crude CLc1 slipped 48 cents to
settle at $58.76 a barrel.