World shares dip in wobbly session; pound slides, oil jumps
* 10-yr U.S. yield hits 14-month low after Fed signals 2019
* Sterling falls as much as 0.9 pct to the dollar
* U.S. crude jumps to 4-month high after data
(Updates to U.S. stock market close)
By Rodrigo Campos
NEW YORK, March 20 (Reuters) - A gauge of stocks across the
world fell on Wednesday as a boost from a dovish Federal Reserve
was not enough to offset concerns over economic growth and
U.S.-China trade talks.
Sterling fell after British Prime Minister Theresa May said
she was not prepared to delay Brexit further than June 30.
Despite the pound's sharp drop, the dollar index hit its lowest
level since Feb 4.
The Fed took a more accommodative policy posture, signaling
it will not hike interest rates this year in the face of a
slowing economy, while announcing a plan to end its balance
sheet reduction program by September.
The initial reaction to the Fed throughout markets was
towards more risk-taking, and stocks on Wall Street rallied out
of negative territory, lifting a global stocks index.
But concern over the Fed's flagging of a weaker U.S.
economy, alongside lingering worries about China-U.S. trade
talks that are set to resume next week, dragged stocks into the
red by the end of the session.
Strong support from the Fed could mean the economy is not in
great shape or maybe worse shape than market participants
believe, according to Art Hogan, chief market strategist at
National Securities in New York.
Hogan added that "maybe there still is some trouble in
paradise with the U.S.-China trade talks and that is probably
more important” than where the Fed stands on monetary policy.
At the closing bell, the Dow Jones Industrial Average
fell 141.71 points, or 0.55 percent, to 25,745.67, the S&P 500
lost 8.34 points, or 0.29 percent, to 2,824.23 and the
Nasdaq Composite added 5.02 points, or 0.07 percent, to
MSCI's gauge of stocks across the globe shed
0.42 percent, its first daily decline since March 8.
The pan-European STOXX 600 index lost 0.90 percent
and emerging market stocks lost 0.23 percent.
FED DRAGS DOLLAR LOWER
In currency markets, sterling fell as much as 0.93 percent
against the U.S. dollar after British Prime Minister Theresa May
asked the EU to delay Brexit until June 30, a shorter extension
than some in the market had been expecting, and later said she
was "not prepared to delay Brexit any further."
The pound closed the session down 0.54 percent at
$1.3195, but that was not enough to lift the dollar index after
the dovish Fed statement. The dollar index fell 0.39
"The dollar has come under pressure against a large number
of currencies around the world," said Chuck Tomes, associate
portfolio manager at Manulife Asset Management in Boston.
"Overall it seems the Fed was able to solidify their dovish
view as there are no rate hikes priced in for this year and only
one rate hike for 2020," he said.
The euro rose 0.55 percent to $1.1411, while the
Japanese yen strengthened over 0.6 percent versus the greenback
at 110.68 per dollar.
In the oil market U.S. crude prices rose to a 4-month high
above $60 a barrel after U.S. government data showed tightening
domestic oil supplies, but gains were capped by concerns over
global economic growth due to the ongoing U.S.-China trade war.
U.S. crude rose 1.18 percent to $59.99 per barrel and
Brent was recently at $68.29, up 1.01 percent on the
Treasury yields fell after the Fed's statement, with the
benchmark 10-year touching a 14-month low. The yield curve
was at its flattest so far in 2019.
"There's one hike projected for 2020 but there's a long time
between now and then and so the market is effectively taking the
view that the Fed is done tightening," said Evan Brown, head of
macro asset allocation strategy at UBS Asset Management.
Benchmark 10-year notes last rose 25/32 in price
to yield 2.5245 percent, from 2.612 percent late on Tuesday.
The 30-year bond last rose 1-4/32 in price to
yield 2.9698 percent, from 3.026 percent late on Tuesday.
Spot gold added 0.5 percent to $1,312.24 an ounce.
Copper lost 0.03 percent to $6,457.00 a tonne and
palladium hit a record high of $1,608.005 per ounce on
concern over tight supplies.
(Reporting by Rodrigo Campos, additional reporting by Stephanie
Kelly, Kate Duguid, Richard Leong, Saqib Iqbal Ahmed and Lewis
Krauskopf in New York; Editing by Bernadette Baum, Dan Grebler
and Cynthia Osterman)
First Published: 2019-03-20 03:06:10
Updated 2019-03-20 23:24:22
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