Hong Kong (AFP) – European stock markets rebounded on Wednesday and the dollar recovered from two-month lows against the euro and yen, with the Fed set for its first monetary policy announcements of 2017.
Around 1100 GMT, London’s benchmark FTSE 100 index was up 0.7 percent compared with the close on Tuesday.
In the eurozone, Frankfurt’s DAX 30 index was 1.0 percent higher and the Paris CAC 40 jumped 1.2 percent.
Europe’s indices had fallen Tuesday, with Frankfurt closing down 1.3 percent, as US President Donald Trump’s flurry of executive orders fuelled worries about the outlook for the global economy.
“The volatility of the past couple of days seems to have given way to some fresh buying, although the presence of the Fed meeting on the calendar today could result in some hesitancy,” said IG chief market analyst Chris Beauchamp.
The Federal Reserve on Wednesday concludes a two-day monetary policy meeting, with observers expecting no change in interest rates owing to US economic and political uncertainty.
Central bankers have been cautious about raising rates too quickly, and likely will tread cautiously as the Trump administration threatens to cancel trade pacts and impose new tariffs, criticises trade partners and promises economic stimulus and slashed regulation.
The Fed in December adopted only its second interest rate rise in a decade — putting the target range for the overnight lending rate at between 0.5 and 0.75 percent.
The US central bank had indicated that it expected to implement three interest rate increases this year, but that will depend on how the economic data develops.
On Wednesday meanwhile, the dollar recovered from Tuesday’s hefty sell-offs that came after Trump and one of his key economic advisers hit out at other nations using their weaker currencies to gain a trade advantage.
This has led traders to seek out investments deemed safe such as the yen and gold, while the greenback’s present struggles are a far cry from the rally that followed Trump’s November election win, when investors bet his plans to cut taxes and spend big on infrastructure would fire the US economy, stoke inflation and lead to interest rate hikes.
– ‘No one is safe’ –
While the tycoon will likely press on with those measures, his latest remarks have added to worries that the White House is intent on pursuing a protectionist agenda that many warn could lead to a global trade war.
“It appears that no one is safe, friend or foe from the wrath of this new US administration when it comes to trade,” Stephen Innes, senior trader at Oanda, said in a client note.
In Tokyo Wednesday, the Nikkei stocks index ended a volatile day with a gain of 0.6 percent, boosted by the dip in the yen according to traders.
Hong Kong ended with a loss of 0.2 percent, with dealers brushing off data showing Chinese factory activity expanded last month.
– Key figures around 1100 GMT –
London – FTSE 100: UP 0.7 percent at 7,151.48 points
Frankfurt – DAX 30: UP 1.0 percent at 11,645.19
Paris – CAC 40: UP 1.2 percent at 4,804.49
EURO STOXX 50: UP 1.0 percent at 3,261.46
Tokyo – Nikkei 225: UP 0.6 at 19,148.08 (close)
Hong Kong – Hang Seng: DOWN 0.2 percent at 23,318.39 (close)
Shanghai – Composite: Closed for holiday
New York – Dow: DOWN 0.5 percent at 19,864.09 (close)
Euro/dollar: DOWN at $1.0788 from $1.0797
Pound/dollar: UP at $1.2601 from $1.2576
Dollar/yen: UP at 113.38 yen from 112.85 yen
Oil – West Texas Intermediate: UP 16 cents at $52.97 per barrel
Oil – Brent North Sea: UP 16 cents at $55.74
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