AFP/APP – World stocks nudged higher Tuesday in cautious trading on the eve of a US Federal Reserve decision, with European gains capped by news of plunging German investor confidence.
Equities also were wobbly amid a continuing sell-off of Facebook shares, while concerns of a possible trade war sparked by President Donald Trump's announcement on tariffs also weighed.
US stocks spent most of the session in positive territory and finished with modest gains. However, the NASDAQ in particular experienced multiple bouts of selling before recovering.
In Germany, a survey of 220 analysts and investors from the ZEW institute fell to 5.1 — a slump of 12.7 points from February and far below the 13.1 forecast by analysts.
The last time the confidence reading was so low was in the months after Britain's June 2016 vote to quit the European Union.
Facebook falls again –
London stocks meanwhile gained ground after data showing a slowdown in British annual inflation in February, which analysts said took some pressure off the Bank of England to raise rates and led to a weakening of the pound.
“Small gains in UK and European markets have not put much of a dent in yesterday's losses,” IG analyst Chris Beauchamp said.
US stocks pushed higher, boosted by gains in oil-linked shares despite lingering worries about trade and a Facebook data scandal that hit social media shares and led to punishing losses in the broader market on Monday.
Facebook dropped 2.6 percent, adding to Monday's big decline on word the Federal Trade Commission was investigating the company over reports that a data analysis firm hired by Trump's presidential campaign misused the data of some 50 million users.
Twitter, another big social media company, slumped 10.4 percent after Israeli Justice Minister Ayelet Shaked threatened “legal action” against the microblogging network for not doing enough to counter messages that incite violence against Israel.
Investors also were keeping a close watch on the Fed's meeting this week, seeking clues about its timetable for tightening monetary policy.
The dollar rose against the euro and other currencies ahead of Wednesday's Fed announcement. The US currency is expected to rally further if the Fed signals it expects four interest rate hikes this year rather than three.
“However if it stays at three hikes this year (two more after tomorrow's tightening), the dollar will fall,” Kathy Lien of BK Asset Management predicted.
But she said the Fed may prefer the less hawkish route.
“There is no real advantage to telegraphing four rounds of tightening so early in the year,” Lien said. “They can wait and see how the economy and the markets absorb the first two hikes before suggesting that two more will follow. This gives the Fed flexibility in the months ahead.”
Key figures around 2100 GMT
New York – Dow: UP 0.5 percent at 24,727.27 (close)
New York – S&P 500: UP 0.2 percent at 2,716.94 (close)
New York – Nasdaq: UP 0.3 percent at 7,364.30 (close)
London – FTSE 100: UP 0.3 percent at 7,061.27 (close)
Frankfurt – DAX 30: UP 0.7 percent at 12,307.33 (close)
Paris – CAC 40: UP 0.6 percent at 5,252.43 (close)
EURO STOXX 50: UP 0.5 percent at 3,413.11 (close)
Tokyo – Nikkei 225: DOWN 0.5 percent at 21,380.97 (close)
Hong Kong – Hang Seng: UP 0.1 percent at 31,549.93 (close)
Euro/dollar: DOWN at $1.2242 from $1.2335 at 2200 GMT Monday
Pound/dollar: DOWN at $1.3996 from $1.4024
Dollar/yen: UP at 106.54 yen from 106.10 yen
Oil – Brent North Sea: UP $1.37 at $67.42 per barrel
Oil – West Texas Intermediate: UP $1.34 at $63.40 per barrel
