“We’re in many ways in a sweet spot. We’ve got stable and steady economic growth and strong earnings growth and low interest rates and inflation,” said Jack Ablin, chief investment officer at BMO Private Bank. “The only issue is valuation.”
The Fed, as expected, kept interest rates unchanged as it reported the US was growing at a “solid pace” and was not significantly dented by Hurricanes Harvey and Irma. That statement solidified the view the US central bank is likely to raise interest rates in December.
The Fed decision came as an ADP report estimated private-sector hiring surged by 235,000 jobs in October, while the Institute for Supply Management reported manufacturing industry growth tempered a bit in October but was still strong.
The US central bank will remain in focus on Thursday with Trump’s announcement of his choice to lead the Federal Reserve.
The Wall Street Journal reported that Trump informed current Fed Governor Jerome Powell on Tuesday that he will be the nominee. Powell, an attorney and former investment banker who has emerged as a consensus choice.
In Europe, Frankfurt’s Dax index was up a solid 1.8 percent by the close as German investors played catch-up after a bank holiday and a weaker euro gave a boost to exporters.
Paris followed suit with much more modest gains, while London ended almost unchanged, with the benchmark FTSE 100 failing to capitalize much on a soft pound.
Many investors felt jittery ahead of a key Bank of England decision Thursday on interest rates, which are widely expected to be hiked to counter Brexit-fueled inflation. If so, this would be the first British rate rise since 2007.
The London market was also hampered by weakness among clothing retailers after a trading update from Next which also weighed on rival Marks & Spencer.
Asia rally –
Tokyo and Seoul led a rally in Asian shares amid strong earnings reports across the region including from tech giants Sony and Samsung.
Asia has witnessed an impressive profit reporting season so far, with Sony the latest electronics blue-chip to announce it was expecting record annual profits.
Tokyo finished at a fresh 21-year high, trading up 1.9 percent, as firms benefited from a weak yen—making their products more competitive in foreign markets and inflating repatriated profits.
Key figures around 2040 GMT –
New York – DOW: UP 0.3 percent at 23,435.01 (close)
New York – S&P 500: UP 0.2 percent at 2,579.36 (close)
New York – Nasdaq: DOWN 0.2 percent at 6,716.53 (close)
London – FTSE 100: DOWN 0.1 percent at 7,487.96 (close)
Frankfurt – DAX 30: UP 1.8 percent at 13,465.51 (close)
Paris – CAC 40: UP 0.2 percent at 5,514.29 (close)
EURO STOXX 50: UP 0.6 percent at 3,697.40
Tokyo – Nikkei 225: UP 1.9 percent at 22,420.08 (close)
Hong Kong – Hang Seng: UP 1.2 percent at 28,594.06 (close)
Shanghai – Composite: UP 0.1 percent at 3,395.91 (close)
Euro/dollar: DOWN at $1.1625 from $1.1647
Pound/dollar: DOWN at $1.3252 from $1.3283
Dollar/yen: UP at 114.07 yen from 113.65 yen
Oil – Brent North Sea: DOWN 45 cents at $60.49 per barrel
Oil – West Texas Intermediate: DOWN 8 cents at $54.30, reports AFP, New York.