Central banks back in focus as political tensions ease
U.S. stocks and the dollar were steady on Wednesday with investors cautious ahead of a U.S. Federal Reserve statement that may give clues on whether the central bank will raise interest rates for a third time this year.
MSCI's World index, which tracks stocks in 46 countries, was up 0.1 per cent and hit another record, while U.S. Treasuries prices gained slightly.
With the Fed due to release its latest policy statement at 2 p.m. ET, caution prevailed. The U.S. central bank is widely expected to announce that it will begin paring its bond holdings, and many analysts and investors expect the reductions may begin in October.
While the Fed is expected to hold rates steady, investors are keen to see the Fed's economic projections and any other signals on whether a rate increase in December is likely.
"If they are slightly more dovish in their language, I think you could see a reversal in the banks, but I don't see a lot of activity," said Aaron Clark, portfolio manager at GW&K Investment Management.
The S&P financial index was up 0.2 per cent on Wednesday after rising 0.8 per cent in the previous session.
The Dow Jones Industrial Average rose 9.85 points, or 0.04 per cent, to 22,380.65, the S&P 500 lost 0.67 points, or 0.03 per cent, to 2,505.98 and the Nasdaq Composite dropped 21.10 points, or 0.33 per cent, to 6,440.23.
The pan-European FTSEurofirst 300 index lost 0.18 per cent.
Markets are pricing in a 58-per cent probability of the Fed raising rates in December, according to the CME Group's FedWatch tool.
The European Central Bank is widely expected to say next month that it will begin scaling back its asset-purchase stimulus program from January, even though a stronger euro, which dampens inflation, has complicated the outlook.
The dollar index fell 0.01 per cent, with the euro unchanged at US$1.1992.
The New Zealand dollar hit its strongest in more than a month at US$0.7374 after a poll showed the ruling National Party regaining a wide lead over the opposition before Saturday's election.
In the bond market, benchmark 10-year notes were last up in 3/32 price to yield 2.232 per cent, from 2.243 per cent on Tuesday.
Oil prices were higher, but pared gains after data showed a bigger-than-expected build in U.S. crude inventories.
U.S. crude rose 1.78 per cent to US$50.36 per barrel and Brent was last at US$55.85, up 1.73 per cent on the day.