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World stock markets rise as Fed's decision awaited

MANILA/HONG KONG--World stock markets were mostly higher Wednesday as investors calmly waited for word from the U.S. Federal Reserve on when it will start reducing its monetary stimulus.

Few expect that the Fed will announce that it plans to pare back, or “taper,” its huge bond-buying program after its two-day policy meeting wraps up in Washington on Wednesday. However, good news on the U.S. economy this month, including a blockbuster jobs report, and a budget deal appeared to have increased the likelihood of a change.

The Fed's US$85 billion of monthly bond purchases have kept U.S. interest rates low to encourage economic recovery, but also sent a flood of money into stock markets worldwide in search of higher returns.

In Europe, Britain's FTSE 100 was up 0.3 percent at 6,505.87, France's CAC-40 climbed 0.4 percent to 4,084.43, and Germany's DAX was higher by 0.6 percent, at 9,135.67

U.S. stock futures augur a higher opening on Wall Street. The Dow Jones Industrial futures were up 0.3 percent at 15,911. The Nasdaq 100 futures rose 0.2 percent to 3,472.75.

“Wednesday's Federal Reserve monetary policy announcement is one of the most anticipated events of the year,” said Kathy Lien of BK Asset Management.

John Kicklighter, chief currency strategist at DailyFX, said speculation about the Fed decision “has run rampant.”

“Everything boils down to the FOMC meeting and (Federal Reserve Chairman) Ben Bernanke's press conference 30 minutes later,” said Chris Weston of IG Markets Limited in Melbourne. The Federal Open Market Committee is the Fed's policy-setting committee.

He said traders in Asia were generally positioned for the Fed meeting and “there has been no panic at all, with good, orderly and two-way business from clients.”

“While the key rate is expected to remain unchanged, the attention will be focused on the Fed's move on taper,” Mizuho Bank Ltd. in Singapore said in a market commentary. “Markets are generally expecting the Fed to wind down asset purchases in (the first quarter of) 2014, but recent developments suggest that taper in December cannot be ruled out.”

Asian markets were mixed on Wednesday, with attention focused on Washington as investors await the end of a Federal Reserve policy meeting to find out its plans for a huge stimulus program.

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