GLOBAL MARKETS-Shares gain, dollar falters ahead of Fed meeting
NEW YORK, Sept 16- Shares rose and the dollar fell on Wednesday on stronger risk appetite as U.S. consumer data showed steady demand ahead of a Federal Reserve meeting that investors hope will signal a renewed commitment to its dovish policy stance. Longer-term U.S. Treasury yields fell and Italy’s 10- year borrowing costs hit their lowest level since late…
(Adds U.S. market open, dateline, byline; previous LONDON)
* Equities gain on hopes of dovish Fed stance
* Dollar slips before Fed meeting
* Oil gains as storm hits U.S. output, inventories drop
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Reuters Live Markets blog:
By Herbert Lash
NEW YORK, Sept 16 (Reuters) – Shares rose and the dollarfell on Wednesday on stronger risk appetite as U.S. consumerdata showed steady demand ahead of a Federal Reserve meetingthat investors hope will signal a renewed commitment to itsdovish policy stance.
Longer-term U.S. Treasury yields fell and Italy’s 10-yearborrowing costs hit their lowest level since late August as theFed is expected to provide a somewhat rosier economic outlookand a renewed pledge to keep interest rates low for a long time.
Gold prices edged higher and oil prices rose for a secondday, rising more than 2%, as Hurricane Sally closed U.S.offshore production and an industry report showed U.S. crudeinventories unexpectedly decreased.
At the Fed’s last meeting in August the U.S. central bankadopted a new approach to inflation and unemployment that willallow the economy to run a little hotter than in the past tohelp ensure jobs growth for lower income earners.
The Federal Open Market Committee will release its policystatement and economic projections at 2 p.m. (1800 GMT),followed by Fed Chair Jerome Powell’s news briefing half an hourlater.
The market will be looking for a fuller explanation for howthe Fed will achieve its average inflation target, said MarvinLoh, senior global macro strategist at State Street.
“The Fed has said we’re going to strive for a sustainableaverage inflation number around 2%, but we don’t really knowwhat that means,” Loh said.
“The dollar has become the litmus test for whether or notit’s dovish or hawkish,” Loh said, referring to the Fed. “Thesignals that we get from the fixed income market are not asstrong as they used to be.”
MSCI’s benchmark for global equity marketsrose 0.5% to 578.52, while in Europe the broad FTSEurofirst 300index added 0.31% to 1,443.57.
On Wall Street, the Dow Jones Industrial Average rose0.78%, the S&P 500 gained 0.53% and the Nasdaq Compositeadded 0.15%.
London’s FTSE 100 lagged other European indexes, falling0.59%, but the struggling pound was propped up by aweaker dollar.
MSCI’s emerging markets index rose 0.57%.
U.S. consumer spending slowed in August, with retail salesexcluding automobiles, gasoline, building materials and foodservices sliding 0.1% after a downwardly revised 0.9% increasein July.
Retail sales lost a little bit of steam in August, butconsumers overall are still doing well despite modest weaknessrelative to expectations, said Russell Price, chief economist atAmeriprise Financial at Troy, Michigan.
When the pandemic slowed economic growth, consumers were ina relatively strong financial condition, the direct opposite ofwhat is normally the case for an economic downturn, he said.
“Consumers are still overall doing well despite the modestweakness relative to expectations,” Price said.
The yen rose overnight and extended gains that hit a nearlyseven-week high of 104.995 to the dollar as investors soughtsafer assets.
The dollar index fell 0.223%, with the eurodown 0.03% to $1.1841.
The Japanese yen strengthened 0.53% versus thegreenback at 104.85 per dollar.
Spot gold prices rose 0.61% to $1,967.37 an ounce.
Brent crude futures rose $1.23, to $41.76 a barrel.U.S. crude futures gained $1.40, to $39.68 a barrel.
Zinc prices pushed towards the 16-month highs hit earlierthis month as resurgent Chinese industry bolstered the outlookfor demand and the yuan strengthened, making metals moreaffordable for Chinese buyers.
(Reporting by Herbert Lash; editing by Catherine Evans andJonathan Oatis)