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Stocks mixed ahead of Fed meeting

·Senior City Correspondent, Yahoo Finance UK
·2-min read
WASHINGTON, DC - MARCH 03: Federal Reserve Chair Jerome H. Powell announces a half percentage point interest rate cut during a speech on March 3, 2020 in Washington, DC. (Photo by Mark Makela/Getty Images)
Federal Reserve chair Jerome H Powell. (Mark Makela/Getty Images)

Stocks were mixed on Wednesday afternoon, as investors looked towards a meeting of the US Federal Reserve later today.

By early afternoon, the FTSE 100 (^FTSE) was up 0.2%, the DAX (^GDAXI) was flat in Frankfurt, and the CAC 40 in Paris fell by 0.1%.

European markets had started the day positive but lost momentum after the OECD forecast world GDP could fall by 6% this year as a result of the COVID-19 pandemic. Output could shrink by as much as 7.6% if the world faces a second wave of the virus, the OECD said.

The US open was mixed. Shortly after the open, the S&P 500 (^GSPC) was flat, the Dow (^DJI) was off 0.2%, while the Nasdaq (^IXIC) rose 0.7%.

Investor attention was focused on a meeting of the US Federal Reserve later today. Fed chair Jerome Powell will deliver the central bank’s latest monetary policy statement at 6pm London time, with the central bank’s latest Summary of Economic Projections set to be published too. The quarterly report sets out the Fed’s forecast for economic growth, inflation, and unemployment. Publication was delayed in March due to the COVID-19 pandemic, which made forecasting almost impossible.

Deutsche Bank strategist Jim Reid said he expected the Fed meeting “to mark the first step away from a complete focus on crisis prevention towards more traditional goals of providing accommodation to support the recovery.

READ MORE: UK recession to be worse than France, Italy, Spain, and Germany, warns OECD

“As part of this, they expect that the Fed will announce an open-ended QE program consistent with monthly Treasury purchases of between $65bn and $85bn, while the statement should slightly enhance the commitment to keep rates low,” Reid wrote in a morning note to clients.

Trading was mixed in Asia overnight. Japan’s Nikkei (^N225) rose 0.1%, the Hong Kong Hang Seng (^HSI) was flat, and China’s Shanghai Composite (000001.SS) was down 0.4%.

HSBC (HSBA.L) came under pressure after US Secretary of State Mike Pompeo accused the bank of a “show of fealty” to China. HSBC’s Asia chief recently signed a petition in support of China’s widely condemned Hong Kong security law. Pompeo said the act was a “corporate kowtow” in a statement. HSBC’s shares were down 0.7%.

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