World shares waver as investors await Fed decision on rates

World shares waver as investors await Fed decision on rates

Share markets were stuck on their worst run since November on Monday, as caution gripped traders in a week in which the Federal Reserve is likely to raise USA interest rates and perhaps signal as many as three more lie in store this year.

A man looks at an electronic stock quotation board outside a brokerage in Tokyo, Japan February 9, 2018.

The futures market implied traders widely expected Fed policymakers would raise key borrowing costs by a quarter point to a target range of 1.50 percent to 1.75 percent after the conclusion of a two-day meeting on Wednesday.

New Zealand has a monetary policy decision Thursday.

The pan-European STOXX 600 index was down 0.2 percent by 0956 GMT, as more cyclical sectors such as financials, materials and industrials retreated.

Oil prices traded higher as Brent crude futures rose 0.93 percent to trade at $68.05 per barrel, while US WTI crude futures gained 0.88 percent to trade at $64.10 a barrel.

The Fed has raised rates five times since it began tightening policy in late 2015.

It will also be the first press conference for new Fed Chair Jerome Powell.

Analysts at JPMorgan, however, see a risk the Fed might not only add one more rate rise for this year but for 2019 as well.

The caution also came against the backdrop of global trade war worries which are set to dominate a two-day G20 meeting starting later in Argentina as well as plenty of idiosyncratic factors.

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Wall Street gained late on Wednesday morning, ahead of an imminent USA interest rate hike, as Facebook Inc's (FB.O) shares reversed course to trade higher and energy stocks got a boost from surging oil prices.

Japanese markets fell as tech stocks followed their US peers lower on reports Facebook allowed improper access to user data.

"We remind readers that every single FOMC rate hike this cycle has been a "dovish hike" and the United States dollars has declined on the day (s) post the rise", Richard Grace, chief currency strategist at Commonwealth Bank of Australia wrote in a note to clients.

US President Donald Trump is expected to unveil up to $60 billion in import duties on Chinese goods by Friday.

Investors are also nervous by signs of a brewing global trade war after the Wall Street Journal reported that China was planning counter-measures against USA trade tariffs.

Cole said he remained moderately bullish on the dollar, because the Fed's raising rates faster than other central banks supported the currency.

Elsewhere, the three-month dollar London interbank funding rate continued its advance, rising to 2.27 percent Wednesday, the highest since November 2008. The Canadian dollar CAD=D4 held at $1.3029 from Monday's low of $1.3124, a level not seen since mid-2017.

The dollar rebounded from Monday's losses against the yen following comments from Masayoshi Amamiya, one of the two new deputy governors at the Bank of Japan.

The big four banks rose between 0.6 percent and 1 percent while mining heavyweight Rio Tinto ended on a flat note after ruling out special dividend before the company's half-year results in August.

Fears of a trade war have also weighed on commodity prices, though tensions in the Middle East supported oil, lifting Brent futures LCOc1 nearly half a percent.

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