Global stocks continued to slip on Wednesday morning as investors took profits before the Federal Reserve’s announcement later today which is expected to reveal a second interest rate hike in the past three months. The MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.3 percent on Wednesday after posting notable gains on Tuesday. Japan’s Nikkei 225 index was also down 0.3 percent while South Korea’s Kospi was down 0.2 percent.
The dollar index remained within range on Wednesday, trading slightly higher at 101.70 .DXY, as traders stood to the side in advance of the Fed decision. An interest rate hike on Wednesday would push the Fed’s target overnight lending rate to between 0.75 percent and 1 percent, which is still considered fairly low. Analysts expect additional rate hikes within the coming year as positive jobs data and consumer confidence reports our of the U.S. have shown a strong economic position.
OPEC Deal Called into Question
Oil prices continue to struggle after Saudi Deputy Crown Prince Mohammed bin Salman visited the White House on Tuesday. Bin Salman has been tapped with the daunting job of diversifying Saudi Arabia away from oil. He is also a prominent proponent of the OPEC deal to cut production and stabilize the oil market. Analysts have suggested that despite the difficulties, Bin Salman and his partners would continue to support the production cuts in order to keep oil prices stable so that other plans would have sufficient monetary support.
Brent crude has lost more than 11 percent in the past three weeks, despite a 1.2 percent gain on Wednesday morning.