World stocks grind lower as Fed rate decision looms
World stock markets mostly drifted lower Friday despite a tail wind from Wall Street as investors braced for the Federal Reserve's decision on interest rates next week.
France's CAC 40 dropped 0.7 percent to 4,564.23 and Germany's DAX fell 0.8 percent to 10,125.30. Britain's FTSE 100 shed 0.3 percent to 6,134.61. Futures augured losses on Wall Street after gains Thursday. Dow futures fell 0.4 percent to 16,145.00. S&P 500 futures eased 0.4 percent to 1,932.70.
Traders remain focused on a two-day meeting of Federal Reserve policymakers that ends Thursday. They are trying to anticipate when and how quickly the central bank will begin to raise interest rates from their historically low levels. Those low rates have been a key factor sending stock prices higher over the past seven years. A report Thursday showing a decline in applications for unemployment claims was the latest optimistic sign on the job market, which could prompt the Fed to tighten credit.
Bank of England minutes released Thursday noted improving economic prospects for the U.K., which is one of Europe's mainstay economies. Job figures from Australia showed unexpected improvement. The United States, the world's biggest economy, has released a string of robust employment data while officials in No. 2 economy China have been insisting its growth is on a steady path. In the past week, both Japan and the bloc of euro countries revised recent GDP growth figures, leading to a less pessimistic view of those economies.
"Yesterday's Bank of England minutes noted positive economic prospects and encouraged markets to the view that it's likely to follow the Fed by beginning to lift interest rates next year," said Ric Spponer, chief analyst at CMC Markets in Sydney. "This provides context to the view that markets might ultimately see Fed rate tightening as a positive development, providing leadership to global markets and allowing interest rates to normalize as economies gradually improve."
Hong Kong's Hang Seng shed 0.3 percent to 21,504.37 while China's Shanghai Composite Index added 0.1 percent to 3,200.23. Japan's Nikkei 225 fell 0.2 percent to 18,264.22 and South Korea's Kospi shed 1.1 percent to 1,941.37. Australia's S&P/ASX 200 fell 0.5 percent to 5,071.10. Stock benchmarks rose in Taiwan, Indonesia and the Philippines.
Benchmark U.S. crude was down $1.12 at $45.73 a barrel in electronic trading on the New York Mercantile Exchange. The futures contract rose $1.77 to close at $45.92 a barrel in New York on Thursday after Energy Department data showed an increase in gasoline demand over the past four weeks compared with a year earlier. Brent crude, a benchmark for international oils, was down $1.10 at $47.79 in London after rising $1.31 to close at $48.89 a barrel in the previous trading day.
The euro fell to $1.1284 from $1.1289 the previous day. The dollar fell to 120.52 yen from 120.73 yen.