World stocks watching for Fed rates decision

·3-min read

The S&P 500 and the Dow were up slightly while the Nasdaq fell and the dollar gained as investors waited for clues on the Federal Reserve's interest rate path as well as a raft of economic data and quarterly earnings reports.

Crude oil prices were lower as investors waited anxiously for the Fed's interest rate announcement on Wednesday and commentary on its potential next steps. Also, weaker Chinese manufacturing data was outweighing support from OPEC+ supply cuts slated for this month.

US Treasury 10-year yields were higher after falling on Friday with investors eyeing the banking sector and the busy week ahead.

While some overseas markets were closed for the May 1 holiday, US investors were gearing up for earnings reports such as Apple Inc's, due Thursday, and data including April's US non-farm payrolls report due out on Friday.

Offering some support was JPMorgan Chase & Co's deal to buy most of the assets of First Republic Bank after regulators seized the troubled lender, marking the third major US bank failure in two months.

"It clears up the most recent bank uncertainty," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. But Pavlik noted that there's still "good reason to sit back and remain on hold until we get through this week."

"You've a whole stew of data coming out this week. You don't know if the cioppino is going to be hot, mild or somewhere in between, which is why you have the market hanging around this unchanged level," said Pavlik.

Still, Monday's data appeared to give the dollar a boost while the knee-jerk reaction from stocks was less enthusiastic.

The Dow Jones Industrial Average rose 51.23 points, or 0.15 per cent, to 34,149.39, the S&P 500 gained 0.19 points, or 0.00 per cent, to 4,169.67 and the Nasdaq Composite dropped 35.82 points, or 0.29 per cent, to 12,190.76.

The pan-European STOXX 600 index rose 0.02 per cent and MSCI's gauge of stocks across the globe shed 0.07 per cent. Emerging market stocks lost 0.10 per cent.

US manufacturing pulled off a three-year low in April as new orders improved slightly and employment rebounded, but activity remained depressed amid higher borrowing costs and tight credit.

Also, US construction spending increased more than expected in March, boosted by investment in non-residential structures, but single-family homebuilding remained depressed.

In currencies, the dollar index rose 0.383 per cent, with the euro down 0.45 per cent to $US1.097 ($A1.654). The Japanese yen weakened 0.78 per cent versus the greenback at 137.35 per dollar, while sterling was last trading at $US1.2498 ($A1.8847), down 0.59 per cent on the day.

In Treasuries, yields on benchmark 10-year notes were up 9.7 basis points to 3.549 per cent, from 3.452 per cent late on Friday. The 30-year bond yield was last up 11.8 basis points at 3.7955 per cent. The yield on the 2-year note was last was up 7.3 basis points at 4.1366 per cent.

Weak economic data from China was also in focus with the manufacturing purchasing managers' index (PMI) declining to 49.2 from 51.9 in March for the world's second biggest economy. A score below the 50-point mark separates expansion and contraction in activity.

US crude fell 2.14 per cent to $US75.14 ($A113.31) per barrel and Brent was at $US78.84 ($A118.89), down 1.85 per cent on the day.

Gold gave up all of its gains in volatile trading after the better-than-expected US manufacturing data.

Spot gold dropped 0.4 per cent to $US1,982.50 ($A2,989.54) an ounce while US gold futures fell 0.18 per cent to $US1,986.60.