Stocks slip ahead of Fed meeting; pound drops on Brexit move

AP News
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Posted: Mar 14, 2017 8:37 AM
Stocks slip ahead of Fed meeting; pound drops on Brexit move

SEOUL, South Korea (AP) — Global stocks drifted lower on Tuesday as investors looked to the Federal Reserve's policy meeting for an expected interest rate increase and hints on future hikes. Britain's pound fell after the country's parliament cleared the way for Britain to start its exit process from the European Union.

KEEPING SCORE: Britain's FTSE 100 shed 0.1 percent to 7,358 while France's CAC 40 fell 0.6 percent to 4,968. Germany's DAX lost 0.3 percent to 11,948. Futures augured a tepid start on Wall Street with Dow futures down 0.3 percent and S&P futures shedding 0.4 percent.

U.S. INTEREST RATES: The Fed is scheduled to hold a policy meeting from Tuesday to Wednesday. Most investors expect it to raise rates for only the third time since they went to nearly zero during the financial crisis in 2008. With strong economic reports in recent weeks, expectations that the Fed may stand pat this month have changed. Investors will also be keeping an eye on the Fed's outlook for more rate hikes this year.

ANALYST'S VIEWPOINT: "On the one hand, the market ponders a surprise hold, in which massive unwinding of positions could take place with the hike already priced in," said Jingyi Pan, a market strategist at IG in Singapore. On the other hand, the Fed could raise interest rates from record lows at a pace faster than expected.

BUSY WEEK: The Bank of England, Bank of Japan and other central banks are also holding meetings this week. Many economists expect the Bank of England to hold steady. The British government, meanwhile, has been cleared by parliament to formally begin the process of exiting the EU. It is not expected to do so for another couple weeks, but the prospect has pushed the pound down 0.6 percent to $1.2141. The Netherlands has its own election this week, where politicians have also railed against the EU and immigrants.

ASIA'S DAY: Japan's Nikkei 225 fell 0.1 percent to 19,609.50 but South Korea's Kospi rose 0.8 percent to 2,133.78. India's Sensex gained 1.6 percent to 29,401.19. Hong Kong's Hang Seng closed flat at 23,827.95. The Shanghai Composite Index added 0.1 percent to 3,239.33. Australia's S&P/ASX 200 also was steady at 5,759.10. Stocks in Taiwan were higher and in Southeast Asia, markets were mixed.

CURRENCIES: The dollar edged up to 114.89 yen from 114.88 yen while the euro slipped to $1.0628 from $1.0653.

OIL: Benchmark U.S. crude oil fell 77 cents to $47.63 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 9 cents on Monday. Brent crude, which is used to price international oils, dropped 69 cents to $50.66 a barrel.