Global stocks have edged up as signs of slowing US wage growth supported expectations that the Federal Reserve could signal an end to interest rate hikes at its meeting later in the day.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Wall Street indices had rallied, as had bonds to a lesser extent, while the dollar gave up gains overnight when the Fed's preferred wages gauge, the US employment cost index, showed a one per cent rise last quarter, its smallest increase in a year.
The MSCI All-World index was last up 0.2 per cent on Wednesday, having ended January with a seven per cent gain, thanks in large part to investors growing more optimistic about the outlook for global inflation and interest rates.
The Fed will announce its rate decision at 1430 on Wednesday (0630 on Thursday AEDT), followed by a news conference with chair Jerome Powell.
Interest rate markets have priced in a slowdown in the cracking pace of hikes, with Wednesday's expected 25 basis point hike seen bringing the Fed funds rate target range to 4.5-4.75 per cent.
Barring surprises, the focus will be on Powell's tone. Investors will try to gauge whether and how hard he would push back on market pricing for rate cuts beginning as soon as the second half of this year.
"The market is anticipating some pushback from Powell, although it's difficult to pin down how much is enough to convince the market," said Brian Daingerfield, head of G10 currency strategy at NatWest Markets.
"Anything short of Powell going 10 for 10 hawkish may ultimately be seen as being not hawkish enough. Conversely, the market may take even the smallest dovish concession and run with it."
In Europe, the STOXX 600 rose 0.2 per cent, catching a lift from healthcare stocks including Danish pharma company Novo Nordisk and London-listed rival GSK, which reported results.
Currency markets have also been treading water in the run-up to the Fed meeting, and ahead of the Bank of England and European Central Bank meetings on Thursday.
The dollar dropped for a fourth straight month in January, and lost 1.5 per cent on the euro and 0.8 per cent on the yen . The euro was last up 0.2 per cent at $US1.0882, while against the yen, the dollar fell 0.2 per cent to 129.81.
US Treasuries were cautiously firmer in Asia, with benchmark 10-year yields down 2 bps to 3.5069 per cent. S&P 500 futures fell 0.3 per cent.
Japan's factory activity contracted for a third straight month in January, a private survey showed, while South Korea posted a record monthly trade deficit for January, mainly due to a far worse-than-expected drop in exports.
Facebook owner Meta reports earnings later on Wednesday. Company executives had struck a cautious tone at earnings calls on Tuesday as a slowdown looms.
Exxon posted a record $US59 billion adjusted profit, though Caterpillar and McDonald's shares fell as the companies warned of inflation squeezing profit margins.
In commodity markets, optimism for demand supported oil prices and Brent crude futures rose 0.1 per cent to $US85.57 a barrel, while gold, which rallied on the dollar's weakness through January, fell 0.2 per cent to $US1,923.84 an ounce.
Indian conglomerate Adani Group, meanwhile, remained under pressure, with its flagship Adani Enterprises shares down three per cent and below the lower end of the offer price for a $US2.5 billion stock sale that ended on Tuesday.
Prices for dollar bonds in Adani Group companies steadied after last week's rout.
Australian Associated Press
