Stocks Edge Down As Dollar Rises, Gold Falls After Fed's Powell Offers No New Clues

MSCI's global equities gauge stayed close to flat on Wednesday while the dollar rose and gold prices dipped as investors digested cautious comments from Federal Reserve Chair Jerome Powell about when the central bank might next cut U.S. interest rates.

In his first remarks since the Fed meeting ended with a rate cut last week, Powell on Tuesday underlined the need for policymakers to balance the competing risks of high inflation and a weaker jobs market in its next monetary policy decisions. However, traders were still pricing in a rate cut in October, according to CME Group's FedWatch tool. In Europe, defence stocks jumped after U.S. President Donald Trump said he believed Ukraine could retake all its land occupied by Russia, marking a sudden shift in rhetoric in Kyiv's favour.

In a speech to the U.N. General Assembly, in which he rejected moves by allies to recognise a Palestinian state, Trump chastised Western nations for their approach to climate change and immigration, telling leaders "your countries are going to hell".

After boasting record highs on Monday, Wall Street stocks were barely changed while safe-haven gold prices edged down from their Tuesday record highs.

"Gold is still digesting some of the commentary coming out of the Federal Reserve yesterday and also geopolitical tensions with Russia. It's finding some support here, but slightly cautious ahead of some economic data coming out," said Phillip Streible, chief market strategist at Blue Line Futures.

Spot gold fell 0.35% to $3,750.30 an ounce. U.S. gold futures dropped 0.36% to $3,767.10 an ounce.

Investors are waiting for the Fed's preferred inflation measure, due out on Friday this week. Meanwhile, Wednesday's data showed sales of new U.S. single-family homes surging in August by 20.5% to a seasonally-adjusted annualized rate of 800,000 units. Economists polled by Reuters had forecast a drop to 650,000 units. July sales were revised up to 664,000 units from the 652,000 previously reported. On Wall Street at 10:54 a.m. the Dow Jones Industrial Average rose 81.67 points, or 0.17%, to 46,374.45, the SP 500 rose 2.90 points, or 0.04%, to 6,659.82 and the Nasdaq Composite rose 6.20 points, or 0.03%, to 22,579.68.

MSCI's gauge of stocks across the globe .MIWD00000PUS> fell 0.27 points, or 0.03%, to 981.89 while the pan-European STOXX 600 index rose 0.01%.

In government bond markets, U.S. Treasury yields ticked up with Powell's remarks in focus.

The yield on benchmark U.S. 10-year notes rose 1.5 basis points to 4.133%, from 4.118% late on Tuesday while the 30-year bond yield climbed 0.9 basis points to 4.7458%.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, was up 2.6 basis points to 3.596%.

In currencies, the U.S. dollar rose on Wednesday, after declining in the first two sessions of the week, as investors took cues from Powell's tone even though traders still priced in two more rate cuts this year.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.61% to 97.83.

The euro was down 0.64% at $1.1739 while against the Japanese yen, the dollar strengthened 0.72% to 148.69.

Sterling weakened 0.53% to $1.345 and against the Swiss franc, the dollar rose 0.43% to 0.794.

Oil prices increased over 1% on Wednesday as an industry report showed U.S. crude inventories declined last week, adding to a sense in the market of tightening supplies amid export issues in Kurdistan and Venezuela and disruptions to Russian supplies.

U.S. crude rose 1.51% to $64.37 a barrel and Brent rose to $68.58 per barrel, up 1.4% on the day.

In cryptocurrencies, bitcoin gained 1.63% to $113,866.90. Ethereum rose 0.57% to $4,201.83.

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