Global stocks advanced as the US moved toward agreement on a spending package that would boost the economy.
Gains across markets were modest but broad-based, with the Stoxx 600 Index notching a third day of gains at 0.7 per cent. The pound strengthened as Brexit negotiators worked to strike a trade agreement before the end of the year.
Investors have reacted positively this week to news about a US stimulus package, with senate majority leader Mitch McConnell saying he will keep lawmakers in Washington until a deal gets done. The 10-year Treasury yield remained just above 0.9 per cent amid speculation that the Fed will either offer guidance on or adjust its bond-buying program.
Elsewhere, the dollar steadied after Tuesday’s decline and oil slipped. US equity futures were slightly higher, with the S&P futures up 0.1 per cent as of 8.11am London time.
Investors are growing increasingly confident that Democratic and Republican lawmakers will clinch a bill based on a $748 billion bipartisan proposal that would inject cash directly into the economy as prior benefits begin to expire at the end of the year. Meanwhile, traders are eyeing whether the Fed alters its bond purchase program or keeps the status quo.
"There's a very good chance of a cyclical recovery," George Bory, fixed income specialist at Wells Fargo Asset Management, said on Bloomberg TV. "Your best bet right now is that the Fed basically just extends out some of that forward guidance and tries to preserve as much optionality as possible."
The Fed concludes its meeting Wednesday, with markets widely expecting fresh guidance on its continued asset purchases.
Policy decisions from the Bank of England and central banks in Mexico, Switzerland and Indonesia are due Thursday. Japan and Russia announce decisions Friday. – Bloomberg
