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Global Stocks and Dollar Subdued as Fed, BOJ Meetings Begin

Shares hit pause and the dollar lost ground against the yen on Tuesday, as investors awaited the outcomes of Federal Reserve and Bank of Japan meetings that will both conclude on Wednesday.

"Everybody is just waiting - why do anything today?" said Esther Reichelt of Commerzbank in Frankfurt. "Everyone has already positioned for these events and there is no new information that could give them a reason to reposition."

Traders work at the Egyptian stock exchange in Cairo
Traders work at the Egyptian stock exchange in Cairo. REUTERS/Mohamed Abd El-Ghany REUTERS

Nagging doubts about the firepower left available to top central banks and a slip in oil prices made for another subdued start in Europe as the STOXX 600 dipped in and out of the red after seven falls in the last 10 days.

Industrial firms climbed while oil and gas was the weak spot. Crude prices slipped after major producer Venezuela, itself in a deep economic crisis, said oil markets were effectively 10 percent oversupplied.

The yen was creeping higher in the currency markets, meanwhile amid speculation the Bank of Japan may do little more than tinker with its stimulus program and that the Federal Reserve was likely to stay guarded about its rate hike plans.

The yen was changing hands at 101.645 yen. It has risen almost 20 percent over the past 12 months despite the BOJ's best efforts to weaken it. The euro was also up at$1.1190, though the pound dipped to $1.3008.

European tension over the UK's vote to leave the EU and a flood of immigration has also continued to simmer.

British Prime Minister Theresa May met U.S. business chiefs from firms including Goldman Sachs, IBM and Amazon on Monday in New York to try and reassure investors, while German leader Angela Merkel appeared rueful over the refugee crisis.

"If I could, I would turn back time by many, many years," Merkel said, sounding particularly somber.

Oil slipped back to $45.79 per barrel having briefly rallied on Monday on Venezuela's bid to talk up a potential OPEC output freeze, though that soon fizzled on indications that U.S. crude stockpiles had risen again last week.

Gold though added 0.2 percent to $1,315.90 an ounce, on expectations that the Fed will stand pat on rates when it ends its two-day meeting on Wednesday.

EMini futures for the S&P 500 also edged up 0.2 percent, after major U.S. indexes ended Monday's choppy session nearly flat.

Global markets have been blowing hot and cold in recent weeks over the Fed's intentions, which remain far from clear after both hawkish and dovish comments from several Fed officials.

"It's a lot of uncertainty, leading into the Fed," said Jennifer Vail, head of fixed income research at U.S. Bank Wealth Management in Portland, Oregon.