Market Update & Important Indicators:
U.S. stocks edged slightly lower after the Federal Reserve said it would raise interest rates and signalled it could lift them at the slightly faster pace this year. The Dow Jones Industrial Average slipped 0.5% in recent trading, while the S&P 500 slipped 0.4% and the Nasdaq Composite gained 0.2%. The Fed said it would raise interest rates by another quarter-percentage point, bringing the benchmark federal-funds rate to a range between 1.75% and 2%. Officials pencilled in a total of four rate increases for this year, up from a projection of three increases at their March meeting. The new interest rate guidance shows the U.S. central bank is effectively sticking to a plan to continue raising short-term rates after they reach the level Fed officials expect would neither stimulate nor slow the economy, a so-called neutral level. The consumer-price index data, released Tuesday, showed a 0.2% increase in prices in May. The S&P 500 is now up more than 4% year to date. Elsewhere, investors have reacted positively to a federal judge ruling that AT&T can proceed with its planned acquisition of Time Warner, seeing it as a sign that the field is clear for other corporate mergers to happen. Shares of Time Warner rose 3.2%, while AT&T declined 4.5%. Disney and Comcast, both in a battle over 21st Century Fox's assets that is expected to intensify following Tuesday's decision, rose 5% and fell 0.3% respectively. Shares of Fox rose 7.5%, on pace for an all-time high. The US gold price gained 0.3% to record 1,298.80 US$/oz.
European shares were slightly higher as traders focused on a potential interest-rate hike from the U.S. Federal Reserve. The Stoxx Europe 600 gained 0.19% to 388.25.
Asian stocks traded sideways Wednesday ahead of the Federal Reserve's policy statement later in the day, when officials are widely expected to raise interest rates and provide further clues on their future path. Japan's Nikkei Stock Average closed up 0.4%. Still, Chinese bourses edged down Wednesday, with Hong Kong's Hang Seng down 1.6% and the Shanghai Composite down 1%. Both were pressured by shares of ZTE Corp. plunging about 40%–an $8 billion wipeout–on their first day of trading after nearly two months, reflecting how the Chinese telecommunications giant has been grappling with vast U.S. sanctions. Futures markets point to a 94% chance that the Fed will increase its benchmark rate by 0.25 percentage point Wednesday to a 1.75%-2% range, marking the second rise this year. The question for investors is whether officials will tighten borrowing costs twice more in 2018, or only once.
A pullback by resources stocks amid broad weakness kept Australia's equities market under water today as the roller-coaster run of recent weeks continues. After a modest uptick into the close, the S&P/ASX 200 finished down 0.5% at 6023.5 as the materials sector lost 1.2%, energy shed 1% and major banks continued to slide, led by CBA at 1%. Utilities bucked the trend, with pipeline firm APA surging 21% to record highs and logging its biggest-ever gain as firms created by Hong Kong billionaire Li Ka-shing and newly led by son Victor made a nearly US$10 billion takeover approach. The group last year bought Aussie utility Duet.
Base metal prices were mainly up overnight on the London Metal Exchange. The 3-month copper contract gained 0.6% to 7,251/t whilst tin fell 1.2% to 20,955/t. The price of aluminium fell 1.0% to 2,281/t while nickel gained 2.7% to 15,549/t. Zinc gained 0.8% to 3,256/t.
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