US equities edged higher ahead of Wednesday’s Federal Reserve rate decision, while European stocks gained. The dollar slipped as benchmark Treasury yields held steady, and emerging-market currencies extended a drop.
The S&P 500 Index rose tentatively in morning trading, with a surge in health-care stocks offsetting the telecom weakness brought on after the AT&T takeover of Time Warner won court approval. West Texas crude fell after an industry report showed US stockpiles expanded and Russia was said to seek a rollback of supply cuts by OPEC and other producers.
With the Fed is all but certain to raise rates by a quarter-point at the close of a two-day meeting on June 13, the focus is on the outlook for future policy. An uptick in inflation has reignited some speculation there could be a total of four hikes in 2018.
The European Central Bank was expected to decide rates on Thursday — no change is expected but investors will be braced for news on a potential end to the region’s quantitative-easing programme.
“Everybody knows that the Fed is going to raise,” Jim Kee, president and chief economist of South Texas Money Management, said.
“The Fed just wants to normalise, there’s nothing in the inflation or the growth case telling us you’ve got to move quickly. This is one where the Fed wants to raise rates, and unless inflation is too low and growth is too low, it’s going to do it.”
Technology companies outperformed as the Stoxx Europe 600 Index advanced, though gains there were also tempered by a decline in telecom shares. The region’s common currency was stronger ahead of ECB decision, even as more disappointing economic data were released. The pound weakened as Brexit battles rumbled on and inflation held steady. Italian bonds gained as the country’s debt sale had strong demand.
Gold was little changed and copper advanced, while Bitcoin looked headed for a fourth straight day of declines.
Earlier in Asia, Japanese shares rose as the yen dipped, while equities fell in Hong Kong and Australia. Chinese shares also retreated, with ZTE Corp. plunging by its daily limit after it agreed to a $1 billion fine.
The Federal Reserve is expected to raise interest rates as the US economy remains solid. The ECB rates decision comes on Thursday with a briefing from President Mario Draghi. The Bank of Japan June monetary policy decision and news conference is Friday. FIFA expects more than 3 billion viewers for the World Cup that begins this week in Russia.
The S&P 500 Index gained 0.1 percent in New York. The Stoxx Europe 600 Index climbed 0.2 percent to the highest in more than two weeks. The UK’s FTSE 100 Index advanced 0.1 percent. Germany’s DAX Index gained 0.2 percent to the highest in almost three weeks.
The Bloomberg Dollar Spot Index fell 0.1 percent. The euro advanced 0.2 percent to $1.1772. The British pound declined 0.1 percent to $1.3358. The Japanese yen declined less than 0.05 percent to 110.40 per dollar, the weakest in more than three weeks. The Turkish lira sank 1.2 percent to 4.6508 per dollar, the lowest in more than two weeks.
The yield on 10-year Treasuries dipped less than one basis point to 2.96 percent. Germany’s 10-year yield declined two basis points to 0.47 percent.
Britain’s 10-year yield declined four basis points to 1.357 percent. West Texas Intermediate crude fell 0.6 percent to $65.99 a barrel. Gold gained less than 0.05 percent to $1,296.41 an ounce.