The Federal Reserve and the Bank of England are both expected to hold interest rates steady at the conclusion of their meetings this week. Ahead of the rate decisions, fund managers and analysts say they will be looking for clues on how long officials think they will hold rates steady while gauging the softening in the global economy.
“How long this pause will last is what the market is after,” said Esty Dwek, senior investment strategist at Natixis Investment Managers. Signals from the Fed that rates would likely stay steady have helped stocks bounce higher since January.
“We expect a stabilization in growth, not just in the U.S. but also in major economies, which means that there might be one hike this year,” Ms. Dwek said.
Industrial shares lagged behind the S&P 500. Boeing slid 2.1%, keeping the Dow in check, following a Wall Street Journal report that federal prosecutors and Transportation Department officials were scrutinizing the development of the company’s 737 MAX jetliners.
Marriott International jumped 1.6% after the company said it was planning to open more than 1,700 hotels over the next three years. Elsewhere, the Stoxx Europe 600 edged up 0.3%, buoyed by gains in shares of banks and basic resources companies. Commerzbank and Deutsche Bank, Germany’s two biggest lenders, rose more than 4% apiece after confirming Sunday that they were formally discussing a potential merger.
“The Deutsche-Commerzbank merger is a sign of the times,” said Seema Shah, senior global investment strategist at Principal. “You get into the late-cycle period, where growth is tough and you don’t have support for the northern [European] banking sector with negative interest rates. Then you’re likely to see consolidation.”
Meanwhile, the British pound fell 0.5% against the U.S. dollar as analysts weighed uncertainty over the U.K.’s departure from the European Union. British lawmakers last week rejected for the second time an exit deal struck by U.K. Prime Minister Theresa May and Brussels and voted to delay the final Brexit deadline, currently set for March 29.
Mrs. May could seek to put the withdrawal agreement to the vote a third time this week if she is able to secure support from her ranks, although analysts say that scenario looks unlikely for now. Earlier, stocks across Asia closed higher. The Shanghai Composite soared 2.5% for its biggest one-day gain since February, while Japan’s Nikkei Stock Average finished up 0.6%.