Market Update & Important Indicators:
U.S. stocks were unchanged after the Federal Reserve released minutes from its July meeting that shed little light on when the central bank could next raise interest rates. The minutes, along with the July statement, suggested while a rate increase as early as September is a possibility, the Fed officials won't commit to a move until they reach a stronger consensus about the outlook for growth, hiring and inflation. The market reaction illustrates how investors are still betting rates will remain at ultralow levels. Federal-fund futures pointed to a roughly 50% chance of a rate increase by the end of the year, according to CME Group. Those chances remained steady following the release of the minutes. If interest rates start to rise, stocks and bonds could fall together, he said. Equity markets have risen to record highs not because of earnings growth, but because ultralow rates and quantitative easing have suppressed returns on bonds, making stocks look attractive in comparison, he added. Recent comments from Fed officials have suggested the possibility of higher rates this year remains on the table. But strategists at Deutsche Bank argued in a note Wednesday that stronger global economic momentum, rather than falling bond yields, have given stocks their latest lift. In European markets, the Stoxx Europe 600 reversed early gains to slip 0.8%.
China got a tepid response from investors on its plans to further open up its equity markets, contributing to Wednesday's mixed performance in shares across Asia. At the midday break, Hong Kong's Hang Seng index rose just 0.2%, with the Shanghai Composite declining by 0.2%. Both the Shenzhen Composite Index and the ChiNext index, a listing board focused on fast-growing start-ups, were up 0.3%. The Nikkei Stock Average meanwhile gained 0.5% on the back of a weaker yen. Korea's Kospi traded 0.7% lower. Late Tuesday, China gave the green light to a stock trading link between Hong Kong and the tech-heavy Shenzhen exchanges, while scrapping important limits on how much foreigners can invest in the country's stocks in an effort to entice global investors. However, daily trading flows into both Shenzhen and Shanghai, China's other main market, will remain capped at 13 billion yuan ($1.96 billion) a day, and many Shenzhen-listed companies still won't be easily accessible. Elsewhere in the region, commodity-linked stocks propped up Japanese markets after crude oil prices rose to a fresh one-month high on Tuesday, amid hopes for output caps.
Australian shares drifted to a flat close Wednesday, a third straight day of only modest movements for the market as earnings season continued to grab investors' attention. An overnight fall by U.S. stocks from historical highs set the early tone for the local market, offset by gains in oil, copper and other commodity prices. After spending most of Wednesday in the red, the S&P/ASX 200 picked up in late afternoon trade to finish 3 points, or almost 0.1%, higher at 5535.0.
Copper prices fell Wednesday, weighed down by a stronger U.S. dollar and lower oil prices. The London Metal Exchange's three-month copper contract settled down 0.8% at $4,7774/t at the PM kerb close. Other base metals were mostly mixed. Tin fell 0.9% to $18,393/t, nickel fell 2.5% to $10,209/t, aluminium settled up 1.1% at $1,683/t, zinc fell 0.4% to $2,251/t, and lead gained 0.2% to $1,878/t.
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