Global shares unimpressed by Fed action, dollar recovers

Thu Dec 13, 2012 8:37am EST
 
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By Richard Hubbard

LONDON (Reuters) - World shares were largely flat and commodities slipped on Thursday as investors looked past the Federal Reserve's latest measures to stimulate the U.S. economy to the country's approaching fiscal crisis.

Stock index futures signaled that Wall Street would take a similar view when trading resumes, although data due on producer prices, retail sales and claims for unemployment benefits could have a big influence. .N

The Fed said on Wednesday it would begin buying $45 billion of Treasuries a month from January, on top of the $40 billion a month in mortgage-backed bonds it started purchasing in September to keep the U.S. recovery on track.

Such a big stimulus would normally have been greeted by a sharp rally in riskier asset markets, but many had already priced in the policy decision and other were more worried about the impact on growth of upcoming fiscal policy changes.

The MSCI world equity index .MIWD00000PUS, which had seen seven straight days of gains, was unchanged at 337.80 points,

"What the Fed announced yesterday was more or less expected, so I think we've had people selling the news," Ioan Smith, strategist at Knight Capital, said.

The Fed did surprise many in the markets with its decision to hold interest rates near zero until unemployment falls to at least 6.5 percent and as long as inflation remained low.

Fed chairman Ben Bernanke warned that monetary policy could not offset the damage to growth from automatic spending cuts and tax rises due if talks in Washington on narrowing the budget deficit fail, adding to the cautious reaction to the announcement.   Continued...

 
A general view of the German stock exchange in Frankfurt November 7, 2012. REUTERS/Lisi Niesner