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Wall Street stocks at record highs as Fed meets

·3-min read
The Federal Reserve's policy meeting this week will be closely followed as it prepares to taper its bond-buying program, while traders will also be looking for clues about its plans for interest rates (AFP/Daniel SLIM)

Global stocks mostly rose Tuesday, with US indices hitting fresh records ahead of a key Federal Reserve decision and the leading Paris benchmark notching its first record in 21 years.

All three major US indices ended at records for the third straight day, extending a recent bullish run fueled by strong corporate earnings ahead of Wednesday's announcement from the Fed.

Earlier, the CAC 40 in Paris rose 0.5 percent to break intra-day and closing price records set 21 years ago, before the Internet bubble burst.

Frankfurt also advanced while London pulled back.

Asian stock markets fell as investors remain on edge about the outlook, with Hong Kong and Shanghai weighed down by the latest Covid outbreak in China that led authorities to reimpose strict containment measures.

Following a two-day gathering, the US Federal Reserve is on Wednesday expected to announce plans to begin tapering its huge stimulus program as the economy recovers.

A day later, the Bank of England is seen likely to raise its key interest rate for the first time in more than three years as inflation soars.

- 'Sea change' in policy -

"Attention has shifted towards central banks, as we gear up for a tapering announcement from the Fed and a possible rate hike from the BoE," said IG analyst Chris Beauchamp.

"This does mark quite the sea change from the dominant policy backdrop of the last 18 months, but of course is a signal that things are moving on from the emergency phase as growth recovers and inflation picks up."

With several countries already starting to lift interest rates, traders are now preparing for the end of the cheap cash era, which has helped propel markets to record or multi-year highs.

On Tuesday, the Reserve Bank of Australia said it would no longer artificially maintain low yields on three-year bonds, making it the latest to step back from its easy money strategy.

But the Fed's Wednesday gathering is the main focus of attention.

"The elephant in the room is headline and underlying inflation, which are higher than the (Fed policy board) was anticipating," said Standard Chartered Bank analyst Steve Englander.

Despite the fact that rising interest rates would adversely affect businesses, Wall Street's record run has been driven by strong earnings from major firms.

The vast majority of companies beat expectations, also defying concerns about the impact of surging input costs and spiking Covid infections in the third quarter.

Pfizer again lifted its 2021 profit and revenue outlook on Tuesday, bolstered by the latest surge in Covid-19 vaccinations, including regulatory approvals for boosters and shots for younger populations.

- Key figures around 2050 GMT -

New York - Dow: UP 0.4 percent at 36,052.63 (close)

New York - S&P 500: UP 0.4 percent at 4,630.65 (close)

New York - Nasdaq: UP 0.3 percent at 15,649.60 (close)

London - FTSE 100: DOWN 0.2 percent at 7,274.81 (close)

Frankfurt - DAX: UP 0.9 percent at 15,954.45 (close)

Paris - CAC 40: UP 0.5 percent at 6,927.03 (close)

EURO STOXX 50: UP 0.4 percent at 4,296.22 (close)

Tokyo - Nikkei 225: DOWN 0.4 percent at 29,520.90 (close)

Hong Kong - Hang Seng Index: DOWN 0.2 percent at 25,099.67 (close)

Shanghai - Composite: DOWN 1.1 percent at 3,505.63 (close)

Euro/dollar: DOWN at $1.1583 from $1.1606 at 2100 GMT Monday

Dollar/yen: DOWN at 113.94 from 114.00 yen

Pound/dollar: DOWN at $1.3615 from $1.3665

Euro/pound: UP at 85.05 pence from 84.93 pence

Brent North Sea crude: UP less than 0.1 percent at $84.72 per barrel

West Texas Intermediate: DOWN 0.2 percent at $83.91 per barrel

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