World stock markets choppy as focus remains on Fed
BANGKOK — World stock markets were choppy Wednesday as traders waited for hints from the U.S central bank about when it might begin to reduce its massive stimulus effort.
Investors will be scrutinizing the minutes of the Federal Reserve’s July policy meeting when they are published later Wednesday. The bank currently buys $85 billion a month in government securities in order to help keep interest rates down and spur borrowing and investment. Improvement in the U.S. economy has raised expectations the Fed will begin reducing its monetary stimulus next month.
“It definitely will be a very choppy Asian session for the rest of the day,” said Stan Shamu of IG in Melbourne, Australia. “Everyone is looking for a bit more clarity from these minutes. Whether they provide it or not is still in question.”
Global markets have been shaky this week as traders, worried about a pullback in the Fed’s bond purchases, began dumping bonds. That sent prices lower and yields sharply higher. Money has also flowed out of emerging stock markets, denting the currencies of countries such as Malaysia, Indonesia and India. However, U.S. bond yields pulled back Tuesday, bringing relief to investors worried about higher interest rates.
Attention will also focus on several batches of U.S. economic data. Later Wednesday, the National Association of Realtors will release existing home sales for July. On Friday, the U.S. Commerce Department will release new home sales for July.
“The rest of the week is about housing. It’s also about whether the recovery continues . or fades as fast as mortgage applications have over the past 12 weeks,” analysts at DBS Bank Ltd. in Singapore said in a market commentary.
Britain’s FTSE fell 0.4 percent to 6,429.16. Germany’s DAX was marginally lower at 8,297.90 and France’s CAC-40 rose 0.3 percent to 4,041.70. Wall Street appeared headed for a lower opening, with Dow Jones futures falling 0.2 percent to 14,960. S&P 500 futures lost 0.2 percent to 1,647.
Asian stock markets traded unevenly. Japan’s Nikkei 225 index swung between gains and losses before settling 0.2 percent higher at 13,424.33. South Korea’s Kospi fell 1.1 percent to 1,867.46. Hong Kong’s Hang Seng lost 0.7 percent to 21,817.73.
Among individual stocks, Tokyo Electric Power Co., the operator of Japan’s tsunami-crippled nuclear power plant, plunged 9.3 percent after acknowledging that a massive volume of highly radioactive water had leaked from a storage tank.
Australia’s S&P/ASX 200 rose 0.4 percent to 5,100. Gains by banking stocks helped offset losses by BHP Billiton, which fell 2.2 percent after the mining giant said its full-year profit dropped by nearly 30 percent. National Australia Bank rose 1.8 percent.
Indonesia’s benchmark index rose 1.1 percent after dropping a total of more than 8 percent on Monday and Tuesday. Analysts said investors were pulling money out of emerging markets such as Indonesia in anticipation of a change in U.S. monetary policy.
Benchmark oil for October delivery was down 58 cents to $104.53 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.14 to close at $104.96 on the Nymex on Tuesday.
In currencies, the dollar rose to 97.47 yen from 97.21 yen late Tuesday. The euro fell to $1.3388 from $1.3419.