A Chinese investor eats lunch as she monitors stock prices at a brokerage house in Beijing, Wednesday, Sept. 16, 2015. Asian stocks rose Wednesday, tracking gains on Wall Street as investor optimism mounted ahead of a highly anticipated Federal Reserve policy meeting. (AP Photo/Mark Schiefelbein)
LONDON— A near 5 percent surge in China’s main stock index helped shore up markets around the world Wednesday as investors get ready for the U.S. Federal Reserve’s decision on whether to raise interest rates.
KEEPING SCORE: In Europe, Germany’s DAX rose 0.7 percent to 10,262 while the CAC-40 in France rose 1.5 percent to 4,638. The FTSE 100 index of leading British shares was 1.1 percent higher at 6,203. U.S. markets were poised for a fairly flat opening with Dow futures and the broader S&P 500 futures unchanged.
FED FOCUS: Investors around the world are awaiting the Fed statement Thursday on whether it will raise interest rates for the first time in close to a decade. Futures markets are implying a 30 percent or so chance of a rate increase. Some economists say it’s time to start gradually raising interest rates given that the U.S. job market has more or less recovered. Others argue rates should remain on hold given the recent global stock market turmoil in the wake of concerns over China, as well as subdued inflation pressures.
US INFLATION: The last major data release before the Fed decision is due later when inflation numbers are published. Economists believe prices edged down 0.1 percent last month, according to a survey by the data firm FactSet. They project that core prices, excluding volatile food and energy costs, rose 0.1 percent.
ANALYST VIEW: “If we see evidence that inflationary pressures are picking up or easing off further, it could sway the decision,” said Craig Erlam, senior market analyst at OANDA.
EUROZONE INFLATION: Inflation across the 19-country eurozone was revised down to 0.1 percent in the year to August, in a development that’s likely to renew concern that the region could see another bout of falling prices and prompt more stimulus measures from the European Central Bank. That prompted some weakness in the euro as traders price in the prospect of more action from the ECB. The euro was down 0.4 percent at $1.1223.
JAPAN DOWNGRADE: Standard & Poor’s lowered Japan’s sovereign credit rating and said it doesn’t expect Prime Minister Shinzo Abe’s economic revival strategy to reverse deteriorating government finances within the next three years. The agency lowered the long-term credit rating to A+ from AA- and said its outlook was stable, meaning further changes to the rating are unlikely in the near to medium term. A credit rating downgrade can raise the cost of borrowing overseas for governments but Japan is largely insulated as most state debt is in local hands.
ASIAN SCORECARD: China’s Shanghai Composite Index jumped 4.9 percent to close at 3,152.66, with all of the gains coming in the final hour of trading, a pattern that has led analysts to believe the government is intervening to support share prices. Japan’s Nikkei 225 rose 0.8 percent to close at 18,171.60 and South Korea’s Kospi added 2 percent to 1,975.45. Hong Kong’s Hang Seng gained 2.4 percent to 21,966.66. Australia’s S&P/ASX 200 climbed 1.6 percent to 5,098.80.
ENERGY: U.S. benchmark crude rose 74 cents to $45.33 in electronic trading on the New York Mercantile Exchange. Brent crude, a benchmark for many international types of oil imported into the U.S., added 65 cents to $49.23 a barrel. Associated Press/TVJ