Global Stocks Edge Lower Ahead of Fed

By Riva Gold Features Dow Jones Newswires

Apple's disappointing results and declines in mining companies pressured global stocks Wednesday ahead of an update from the Federal Reserve.

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Futures pointed to a 0.2% opening loss for the S&P 500 after index-heavyweight Apple posted an increase in profit but tepid iPhone demand, weighing on the tech giant and its suppliers in pre-market trading.

Shares of the world's most valuable company had soared to record highs earlier this year while the Nasdaq Composite closed at a fresh high on Tuesday ahead of the report.

"There's quite a lot of optimism built into tech -- it was slightly less positive than people were hoping for," said John Stopford, head of multiasset income at Investec Asset Management.

Global suppliers of Apple came under pressure Wednesday with shares of STMicroelectronics down 2.2% and Dialog Semiconductor off 2.7%.

Later Wednesday, the Federal Reserve releases its latest monetary policy decision, and market participants currently price a less than 5% chance of an interest-rate rise, according to CME Group.

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"We expect this to be one of the more boring FOMC announcements," strategists at RBC Capital Markets said in a note to clients.

Wednesday's meeting doesn't feature a news conference or new economic projections. Still, investors will be interested in any hints at a rate increase in June and the central bank's views on recent economic developments following a modest downturn in growth and inflation figures.

10-year Treasury yields were little changed at 2.292% from 2.296% on Tuesday, while the WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was up 0.2%.

A gauge of private-sector hiring came in slightly above expectations Wednesday, two days ahead of the monthly jobs report.

Jon Adams, investment strategist at BMO Global Asset Management, said he believes the Fed is unlikely to signal a change in stance Wednesday.

Since the Fed's last meeting, "We have taken a bit of a step back from an economic standpoint, but the earnings picture in the U.S. has been very strong," he said. "We knew energy and materials would be strong, but we've seen very broad-based earnings growth."

The combination of mostly solid first-quarter earnings and diminishing political fears has helped keep U.S. equities buoyant in recent sessions, with the S&P 500 off just 0.2% from its record close.

On Wednesday, shares of Mondelez International Inc. were up over 3% in pre-market trading after it said it continued to improve profitability through cost-cutting, while Delphi Automotive shares rose 6% after the company announced a plan to spin off its powertrain systems segment.

In Europe, the Stoxx Europe 600 was down 0.2% in afternoon trading, led lower by a 2.5% drop in the basic resources sector. Chinese iron-ore futures fell sharply after an earlier winning streak and copper futures shed 3.1% to $5,629 a ton as the restocking of London Metal Exchange warehouses coincided with growing worries about Chinese demand.

Europe's auto sector also pulled back following downbeat U.S. auto sales figures on Tuesday.

French 10-year yields edged lower to 0.731% from 0.745% Tuesday, while German yields fell to 0.319% from 0.325% ahead of a televised debate Wednesday between Emmanuel Macron and Marine Le Pen, who face off in Sunday's final round of the French presidential election.

"In all likelihood, it'll be a Macron victory, but our concern is the probability [for Le Pen] is not quite as low as the market is pricing in, " said Mr. Stopford, pointing to a high number of undecided voters and the risk of low turnout for Mr. Macron. Mr. Stopford has taken on some more defensive positions in Europe ahead of the vote.

The euro, which has climbed nearly 2% since the first round of the French vote in late April, was last off 0.1% at $1.0915, even after data confirmed the eurozone economy grew at a steady pace in the first quarter.

The British pound was down 0.1% at $1.2924 as the European Union's chief Brexit negotiator set out tough demands for a divorce deal with the U.K.

Earlier, bank stocks dragged down Australian bourses for a second session following an underwhelming report from Australia and New Zealand Banking to start the sector's earnings season. The S&P ASX 200 fell 1% as weakness among lenders and declines in shares of mining companies offset a partial rebound in some oil-related stocks in Australia.

Brent crude oil was last up 0.8% at $50.84 a barrel after an industry-group reading showed a decline last week in U.S. oil and gasoline stockpiles.

Chinese equities were mostly weaker as investors sold stocks related to the Xiongan economic zone, a proposed megacity that is a two-hour drive south of Beijing. The Shanghai Composite Index shed 0.3%.

Taiwan stocks closed a touch higher even though a number of Taiwan firms are major suppliers for Apple.

Markets in Japan, South Korea and Hong Kong were closed for holidays.

Kenan Machado, David Hodari,

Harriet Torry

, and Robb M. Stewart contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

May 03, 2017 09:08 ET (13:08 GMT)