A rally in global stock markets stalled and the dollar edged lower Wednesday, ahead of news from the Federal Reserve's final meeting of 2016, at which it is expected to raise interest rates for the first time since 2015.
The Stoxx Europe 600 edged down 0.3% in the early minutes of trading, following a mixed session in Asia. Futures pointed to a small opening loss for Wall Street, after U.S. stocks jumped Thursday, sending the Dow to its 25th record close of the year and within striking distance of 20,000, a level it has never reached.
A hold on rates after the Fed's meeting would come as a major shock, with Fed-fund futures signaling a 91% chance of a quarter percentage point rate rise, only the second since the financial crisis.
Instead, focus is likely to be on the U.S. central bank's policy statement, economic forecasts and media conference for insight into future policy.
Many investors believe the pace of U.S. interest rate increases over the next two years will be critical for stocks, which have rallied since the U.S. presidential election in anticipation of higher U.S. growth, inflation and interest rates in upcoming years.
It will also send important signals to the bond market, which were hit by a steep selloff after yields bottomed earlier this summer.
The yield on the 10-year U.S. Treasury note fell to 2.446% Wednesday from 2.479% on Tuesday. The rate-sensitive two-year yield was steady at 1.164%, down from 1.169%, its highest settlement since 2010. Investors sold short-term debt and migrated cash into long-term bonds Tuesday, a move often associated with tighter monetary policy.
The dollar edged down slightly Wednesday, but was still up over 3% since the election. The dollar was last down 0.1% against the euro, British pound and Japanese yen.
Japanese 30-year yields fell to 0.732% from 0.8% Tuesday, as the Bank of Japan moved Wednesday to stem a recent climb in yields. This was its first attempt to guide rates lower on bonds with more than 10 years left until maturity since it began its policy experiment in September.
—Takashi Nakamichi contributed to this article
Write to Riva Gold at riva.gold@wsj.com
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