US stocks edge higher ahead of Fed decision; Treasuries rise

Bloomberg

US stocks edged higher as strong earnings and a continuation of trade talks helped ease investor concerns.
Treasuries rose ahead of the Federal Reserve’s rate decision.
The S&P 500 advanced for the first time in three days, fuelled in large part by Apple Inc after the company lifted its forecast. Sentiment also got a boost after US and Chinese officials set a date for further trade discussions in September. Consumer shares weighed on benchmarks.
The dollar weakened against major peers, and yields on 10-year Treasuries traded around 2.03 percent as markets readied for the Fed’s anticipated rate cut on Wednesday.
With one of the week’s key events — trade talks — over for now, investors still have the Fed, an ongoing slew of corporate results and Friday’s US jobs data to contend with. American delegates wrapped up negotiations with their Chinese counterparts in Shanghai with little evidence of progress towards ending the year-long trade dispute.
And with a Fed rate cut already baked into market pricing, chairman Jerome Powell’s post-meeting press conference on Wednesday was expected to be parsed for clues on where policy goes next.
“With futures markets pricing in three rate cuts by the end of the year, even if the Fed cuts rates by a quarter-point as widely expected, Fed Chairman Powell will need to sound
extremely dovish to avoid disappointing increasingly needy investors,” said Alec Young, managing director of global markets research at FTSE Russell.
“If the Fed statement sounds in any way cautious about their willingness to continue cutting rates, risk assets are likely to see significant knee-jerk selling.”
Meanwhile, shares in China and Hong Kong were also weighed down by a pledge by the Communist Party’s Politburo to avoid applying stimulus to the property market. The pound edged higher after four days of declines.
Fed officials were expected to announce their decision on Wednesday. Powell was expected to hold a press conference following the FOMC’s meeting. The Bank of England policy decision is due on Thursday. The US July jobs report is due on Friday.
The S&P 500 Index rose 0.1 percent in New York time. The Stoxx Europe 600 Index rose 0.2 percent. The MSCI All-Country World Index fell 0.1 percent. The UK’s FTSE 100 Index fell 0.8 percent, the largest fall in a week.
The Bloomberg Dollar Spot Index dropped less than 0.1 percent. The euro decreased 0.2 percent to $1.1137. The British pound increased 0.7 percent to $1.2238, the first advance in a week. The Japanese yen rose 0.1 percent to 108.51 per dollar.
The yield on 10-year Treasuries fell three basis points at 2.06 percent. Germany’s 10-year yield dipped one basis point to -0.41 percent. Britain’s 10-year yield rose less than one basis point to 0.63 percent.
West Texas Intermediate crude climbed 0.7 percent to $58.44 a barrel, hitting the highest in more than two weeks.
Gold fell 0.1 percent to $1,440.10 an ounce.