Markets await Fed news; UK stocks surge as pound struggles

An investor walks in front of stock trading boards at a private stock market gallery in Kuala Lumpur, Malaysia, Monday, July 29, 2019. Asian shares were mostly lower Monday as investors watched for developments in the trade conflict between the U.S. and China, with talks set to continue this week. (AP Photo/Vincent Thian)
An investor walks in front of stock trading boards at a private stock market gallery in Kuala Lumpur, Malaysia, Monday, July 29, 2019. Asian shares were mostly lower Monday as investors watched for developments in the trade conflict between the U.S. and China, with talks set to continue this week. (AP Photo/Vincent Thian)

LONDON — Global stock markets generally traded in narrow ranges Monday as investors awaited developments in the trade dispute between the U.S. and China and in the run-up to the Federal Reserve's latest interest rate decision.

The FTSE 100 index of leading British shares was the standout index in Europe, spiking sharply amid the continuing selling of the pound, which helps boost firms' exporting potential.

By early afternoon London time, the FTSE was up 1.5% at 7,660 as the pound traded near two-year lows around $1.23 amid ongoing talk that the country will crash out of the European Union at the end of October without a deal to smooth its transition to any future trading relationship.

Britain's new prime minister, Boris Johnson, has said that the country will leave the EU on the scheduled date of Oct. 31, with or without a divorce deal.

"It is effectively a worst-case-scenario end to July for the pound, one that sets up three months of intense Brexit anxiety heading," said Connor Campbell, a financial analyst at Spreadex.

Clearly, Brexit is primarily a consideration in Britain. Elsewhere in Europe, trading was light amid a dearth of news. Wall Street is also set for a flat opening.

Germany's DAX was up 0.1% at 12,431 while the CAC-40 in France was steady at 5,610. Wall Street was poised for an uninspiring start to the week with Dow futures and the broader S&P 500 futures up 0.1%.

The focus in most global markets is very much on the resumption of U.S.-China trade talks as well as a raft of interest rate decisions this week. In addition to the Fed, the Bank of Japan and the Bank of England are also set to make their interest rate announcements.

The Fed though is the most eagerly anticipated as it is expected on Wednesday to cut interest rates for the first time since 2008.

"The resumption of U.S., China trade talks is also welcome at a time when it was feared we might see a further escalation in this long running saga, with expectations now set at a more realistic level, with the prospect of some form of status quo likely to extend into next year," said Michael Hewson, chief market analyst at CMC Markets.

In Asia, there's also a lot of interest on the protests in Hong Kong. Its benchmark sagged, dropping 1.0% to 28,121.32 after another weekend of protests, where police repeatedly fired tear gas and rubber bullets to drive back demonstrators.

The demonstrations began early last month in opposition to an extradition bill that has since been suspended, but the movement has become a broader push for full democracy.

Elsewhere, Japan's benchmark Nikkei 225 edged 0.2% lower to finish at 21,616.80, while Australia's S&P/ASX 200 gained 0.5% to 6,825.80. South Korea's Kospi lost 1.8% to 2,029.48 and the Shanghai Composite dipped 0.1% to 2,941.01. India's Sensex dropped 0.5% to 37,696.63. Shares also fell in Taiwan and Southeast Asia.

ENERGY: Benchmark U.S. oil fell 2 cents to $56.18 a barrel in electronic trading on the New York Mercantile Exchange while Brent crude, the international standard, dipped 18 cents to $63.28 a barrel.

CURRENCIES: The euro was flat at $1.1117 while the dollar was steady at 108.64 yen.

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