Global stocks surge ahead of Fed interest rate call
Asia stocks leaped higher Wednesday but Europe and U.S. stock futures were more cautious as investors bet that the Federal Reserve would raise interest rates from near zero for the first time since 2006.
Japan’s Nikkei 225 index jumped 2.6%, Hong Kong’s Hang Seng index advanced 1.8%. The Shanghai Composite Index in mainland China was more subdued, rising just 0.2%. Benchmarks elsewhere across the region were higher.
Europe stocks too were more reserved, with key regional indexes from London to Frankfurt moving higher but in a tight range between 0.5% to 0.9%. U.S. stock futures saw modest gains before the market open in New York.
The Fed's monetary policy decision is due at 2 p.m. ET.
While Fed Chair Janet Yellen and other central bankers have signaled that the stronger U.S. economy means it may be time to raise rates, Yellen has nevertheless said that any increase would be gradual. The rate has hovered between zero and 0.25% since 2008.
Yellen will hold a press conference after the announcement and investors will be watching for any specific language she uses about the future trajectory of interest rates.
“The Fed will need to carefully harmonize market expectations with their own forecasts,” market analysts at Societe Generale said in a research note.
“Sound too constructive and the market could interpret the Fed as being late in the tightening cycle. Sound too pessimistic and some may lose faith in the progress of the economy," the bank said.
Oil prices fell and the dollar was higher ahead of the Fed's announcement.