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London - European stocks fluctuated after a mixed session in Asia, most government bonds edged higher and the pound and euro gained against the dollar as investors count down to the Federal Reserve’s rate decision and press conference.
Commodities looked more decisive, with oil rising alongside industrial metals.
The Stoxx Europe 600 Index was little changed as country-specific benchmarks were mixed, and futures for the S&P 500 were also flat. Britain’s currency jumped as data showed UK retail sales rose more than forecast in August.
Spanish assets showed resilience even as the government stepped up its crackdown on an illegal separatist referendum planned for the Catalonia region. The Mexican peso swung after a 7.2 magnitude earthquake struck. Benchmark crude rose, eventually managing to break $50 a barrel.
Financial markets largely remain calm - even after President Donald Trump used a UN speech to threaten to annihilate North Korea - as all eyes turn to Wednesday’s Fed decision.
Expectations are high that the central bank of the world’s biggest economy will unveil plans to start shrinking its $4.5trn balance sheet, while any clues on the chances of a rate increase this year could tip the balance - market expectations of another hike in 2017 are at about 50%.
Elsewhere, the New Zealand dollar surged after a poll put the ruling National Party back in the lead ahead of the main opposition Labour Party ahead of this weekend’s election. And the fixing of the yuan remained in focus as investors try to gauge where the People’s Bank of China wants the currency. Read more about the importance of the fixings here.
What to watch out for this week:
• The Fed may confirm a start date for its balance sheet wind-down.
• OPEC’s technical committee meets in Vienna today.
• US’s Tillerson, EU foreign ministers, Iran’s Zarif are set to meet on the sidelines of the UN gathering.
• The Bank of Japan is predicted to stand pat when it reviews policy on Thursday.
• Brexit strategy is in focus as Theresa May prepares to outline her revised approach on Friday.
• Campaigning continues in Germany, days before the September 24 election.
• New Zealand goes to the polls on September 23.
Here are the main moves in markets:
Stocks
• The Stoxx Europe 600 Index declined less than 0.05% as of 12:03.
• The MSCI All-Country World Index jumped 0.1% to the highest on record.
• The UK’s FTSE 100 Index increased 0.1%.
• Germany’s DAX Index decreased less than 0.05%.
• The MSCI Emerging Market Index jumped 0.2%.
• Futures on the S&P 500 Index advanced less than 0.05% to the highest on record.
Currencies
• The Bloomberg Dollar Spot Index decreased 0.2%.
• The euro gained 0.1% to $1.201, reaching the strongest in more than a week on its fifth consecutive advance.
• The British pound increased 0.3% to $1.3539.
Bonds
• The yield on 10-year Treasuries declined two basis points to 2.22%, the largest drop in almost two weeks.
• Germany’s 10-year yield fell two basis points to 0.44%, the biggest drop in almost two weeks.
• Britain’s 10-year yield declined less than one basis point to 1.327%.
Commodities
• Gold advanced 0.3% to $1 315.36 an ounce.
• West Texas Intermediate crude advanced 1.2% to $50.07 a barrel, the highest in more than seven weeks.
Asia
• The Topix index ended the session in Tokyo almost flat at the highest since August 2015.
• Australia’s S&P/ASX 200 and the Kospi index in Seoul closed slightly lower.
• The Hang Seng Index in Hong Kong swung between gains and losses with the Shanghai Composite Index, before both advanced.
• The Japanese yen advanced 0.2% to 111.33 per dollar, the biggest gain in more than a week.
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