Caution Prevails in World Markets ahead of Fed


Caution descended on markets on Wednesday with world stocks holding below recent record highs as investors waited to see whether the U.S. Federal Reserve would signal a faster path toward policy normalisation than previously expected.

The U.S. central bank ends a closely anticipated twoday meeting later in the day, after a sharp rise in U.S. Treasury yields this year on expectations for stronger growth and inflation.

The Fed is expected to forecast that the U.S. economy will grow in 2021 at the fastest rate in decades. But investors who expect rosier projections to translate to any change in monetary policy will probably be disappointed.

This is one of the most important Fed meetings weve had for some time and the impact will be felt across asset classes, said Seema Shah, chief strategist at Principal Global Investors.

Markets are hoping for reassurance from the Fed that rising bond yields are not something to worry about, and that takes a bit of steam out of the bond market.

Before the Fed statement at 1800 GMT, calm prevailed across world markets.

MSCIs world equity index was down 0.1, but keeping last months record highs within sight.

European shares were a touch softer, while in Asia, an index of regional equities excluding Japan pulled back 0.4. Japans Nikkei 225 closed flat.

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