Wall Street flat ahead of Fed, euro gains

By Daniel Bases

NEW YORK (BestGrowthStock) – U.S. stock prices were flat early on Tuesday as investor caution ahead of a U.S. interest rate decision left little appetite for risk while the euro was aided by a modest improvement in German economic sentiment.

Share prices generally rose globally while the weaker U.S. dollar gave a boost to commodities, helping both crude oil and gold prices rise more than 1.25 percent.

The U.S. Federal Reserve started a regular interest rate-setting meeting while the latest U.S. economic data showed winter storms disrupted house building last month and prices paid for imported products provided more evidence of a tentative economic recovery.

A combination of the weak economic data, which gave U.S. Treasuries a slight fillip as inflation is not an immediate concern, and likely unchanged interest rates, currently in a range of zero to 0.25 percent, means borrowing costs will stay low. The Fed decision is expected around 2:15 p.m. (1815 GMT).

“The anticipation for the Fed is that they’re going to give a slightly more upbeat outlook for the U.S. economy but at the same time they’re going to keep the language intact and not signal any rate increase any time soon,” said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.

The greenback fell against a basket of major trading-partner currencies with the U.S. dollar index (Read more about the global trade. ) (.DXY: ) down nearly 0.5 percent at 79.884.

In early New York trade, the Dow Jones industrial average (.DJI: ) slipped 4.23 points, or 0.04 percent, at 10,637.92. The Standard & Poor’s 500 Index (.SPX: ) rose 1.16 points, or 0.10 percent, at 1,151.67. The Nasdaq Composite Index (.IXIC: ) gained 0.71 points, or 0.03 percent, at 2,362.92.

MSCI’s all-country world index (.MIWD00000PUS: ) rose 0.58 percent, with the pan-European FTSEurofirst 300 (.FTEU3: ) gaining 0.62 percent, off its session highs as Wall Street opened with only a tepid advance.

European bank shares rose, helped push indexes higher.

However, Japan’s Nikkei closed 0.3 percent (.N225: ) lower as the market took a breather after having risen to a seven-week high in the previous session.

EUROPE

EU finance ministers on Tuesday discussed standby plans drawn up by countries using the euro to provide Greece with financial help if it becomes the first state in 11 years of euro zone monetary union to seek such aid.

“The developments on Greece will be taken as a positive, although the proof of the pudding will be in the eating,” said Andy Lynch, fund manager at Schroders.

The euro crept up against the dollar and yen following both the finance ministers’ meeting and after data showed the German ZEW institute’s economic sentiment index came in higher than expected.

The euro rose 0.39 percent at $1.3727 from a previous session close of $1.3673. Against the Japanese yen, the dollar fell 0.21 percent at 90.33 yen from a previous session close of 90.520.

Crude oil prices rose 1.79 percent or $1.41 a barrel to $81.21. Spot gold prices climbed 1.40 percent or $15.50 an ounce to $1,123.60.

Benchmark 10-year U.S. Treasury notes were up 4/32 of a point in price, pushing the yield down to 3.68 percent from 3.70 percent late on Monday.

Euro zone benchmark government bond futures turned positive at Wall Street’s open. Greek debt yields widened their premium over German Bunds after some profit-taking on weaker sovereigns’ paper.

The June Bund future scaled a session high of 122.78 after languishing in negative territory for the first half of the European session.

The premium investors demand to buy 10-year Greek bonds rather than euro zone benchmark Bunds reversed earlier tightening. It was last seen at 310 basis points having earlier marked 297, according to Tradeweb data. The spread was back at levels seen at the European settlement close on Monday.

Stock Market

(Additional reporting by Wanfeng Zhou in New York and George Matlock, Ian Chua, Tamawa Desai, Jessica Mortimer and Brian Gorman in London; Editing by James Dalgleish)

Wall Street flat ahead of Fed, euro gains