Global stocks fluctuate while pound, oil retreat

Sydney - Investors were in a holding pattern ahead of a Federal Reserve meeting in which policy makers are widely expected to raise interest rates, with global stocks directionless after retreating from a record high. Treasuries edged lower and the dollar strengthened.

Stocks in Europe fluctuated after four days of losses while Asian stocks fell amid lower trading volume. The Topix retreated even as data showed Japan’s economy expanded more than initially reported in the fourth quarter.

Chinese shares traded in Hong Kong climbed as a report showed imports surged on seasonal factors. The British pound slid before the chancellor of the exchequer delivers his spring budget. The yield on 10-year Treasury notes climbed for an eighth session. Crude fell below $53 a barrel.

Trepidation is setting in after one of the steepest post-election rallies in history drove the value of global equities towards $71trn amid optimism Donald Trump can spur growth with huge spending projects and lower taxes. That pushed valuations on the MSCI All Country World Index to the highest since 2015, approaching the most expensive ever.

Data from Tokyo showed Japan’s economy has expanded for four consecutive quarters, the longest run in more than three years. But the growth has been modest and mostly driven by exports, while private consumption at home remains soft.

China’s imports jumped 44.7% while exports rose 4.2% in February in yuan terms, though the results were skewed because of the timing of the week-long Lunar New Year holiday.

Expectations for swings in prices of bonds, currencies and stocks are all falling. Ever since Donald Trump gave his speech to a joint session of Congress last week and Fed officials including New York Fed President William Dudley ramped up odds of an interest-rate hike this month, volatility metrics across the board have plunged.

What’s ahead for the markets:

Mario Draghi probably won’t flinch at Thursday’s ECB meeting even after headline inflation reached its 2% target in February. He’s expected to keep QE going until the end of the year with underlying price pressures muted.

US jobs data for February are due on Friday. Employers probably added around 190 000 workers to payrolls, in line with the average over the past six months and a sign of steady job growth, economists forecast. Philip Hammond’s UK budget arrives on Wednesday. The chancellor pledged on Sunday to set aside money to cushion the economy from Brexit.

Here are the main moves in markets:

Stocks

The Stoxx Europe 600 was little changed at 10:31, after European shares declined for a fourth straight session on Tuesday. The MSCI Asia Pacific Index fell 0.1%, with more than 550 shares falling against about 375 advancing. Japan’s Topix index dropped 0.3%, retreating for the third time in four days. 

Chinese shares traded in Hong Kong increased 0.5%, while the Hang Seng index added 0.4%. Contracts on the S&P 500 slipped 0.1%. The benchmark index lost 0.3% on Tuesday, completing the first back-to-back declines since January. Health-care shares declined after Republicans released details of a replacement for Obamacare and the president tweeted about lowering drug costs for Americans.

Currencies

The Bloomberg Dollar Spot Index rose 0.1%, heading for a third day of gains. The yen added 0.1% to ¥113.92/$. The British pound slipped 0.2% to $1.2177, falling for a third day, and the euro fell 0.1% to $1.0559.

Bonds

Yields on 10-year Treasuries rose one basis point to 2.53%. Australian benchmark yields gained four basis points to 2.86% and New Zealand yields climbed two basis points to 3.33%.

Commodities

Gold dropped 0.2% to $1 213.04 per ounce after declining 0.8% in each of the past two trading sessions. Oil lost 0.7% to $52.76 a barrel as US industry data showed crude stockpiles expanded, adding to an inventory overhang.

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