Stocks slip ahead of Fed meeting; pound drops on Brexit move

SEOUL, Korea, Republic Of — Global stocks drifted lower on Tuesday as investors looked to the Federal Reserve’s policy meeting for an expected interest rate increase and hints on future hikes. Britain’s pound fell after the country’s parliament cleared the way for Britain to start its exit process from the European Union.

KEEPING SCORE: Britain’s FTSE 100 shed 0.1 per cent to 7,358 while France’s CAC 40 fell 0.6 per cent to 4,968. Germany’s DAX lost 0.3 per cent to 11,948. Futures augured a tepid start on Wall Street with Dow futures down 0.3 per cent and S&P futures shedding 0.4 per cent.

U.S. INTEREST RATES: The Fed is scheduled to hold a policy meeting from Tuesday to Wednesday. Most investors expect it to raise rates for only the third time since they went to nearly zero during the financial crisis in 2008. With strong economic reports in recent weeks, expectations that the Fed may stand pat this month have changed. Investors will also be keeping an eye on the Fed’s outlook for more rate hikes this year.

ANALYST’S VIEWPOINT: “On the one hand, the market ponders a surprise hold, in which massive unwinding of positions could take place with the hike already priced in,” said Jingyi Pan, a market strategist at IG in Singapore. On the other hand, the Fed could raise interest rates from record lows at a pace faster than expected.