World stocks waver as Fed steers clear of signaling rate cut

World stocks were mixed on Thursday after the U.S. Federal Reserve kept its benchmark interest rate intact and steered clear of suggesting that a cut was likely this year.

As European traders returned from a May Day break, France’s CAC 40 lost 0.3% at 5,568.45 while Germany’s DAX picked up 0.4% to 12,390.04. Britain’s FTSE 100 index rose 0.1% to 7,391.98.

Losses were capped by a private survey showing that manufacturing in the 19-country eurozone improved marginally in April.

The manufacturing purchasing managers’ index by IHS Markit was 47.9 in April, up from 47.5 in March. Readings above 50 indicate expansion, while lower numbers indicate contraction on the 100-point scale.

U.S. stocks were set for modest gains. The future contract for the S&P 500 index added 0.2% to 2,929.80, while that for the Dow Jones Industrial Average was also 0.2% higher at 26,437.00.

Sentiment was shaken as the Federal Reserve left its benchmark interest rate — which determines the cost of borrowing for individuals and businesses — in a range of 2.25% to 2.5% as expected on Wednesday.

Some traders had hoped the Fed would signal a rate cut to lift persistently low inflation to its 2% target rate. The Fed’s preferred 12-month inflation barometer is running at about 1.5%. But Chairman Jerome Powell steered clear of this at a news conference. “The committee is comfortable with our current policy stance,” he said.

“The world’s most important central bank is apparently in no rush to adjust interest rates, suggesting that investors who had been pricing in a U.S. rate cut this year had their expectations misplaced,” Han Tan of FXTM said in a market commentary.

Trading was light in Asia with markets in Japan and mainland China closed. Hong Kong’s Hang Seng rose 0.8% to 29,944.18 while Australia’s S&P ASX 200 lost 0.6% to 6,338.40. The Kospi in South Korea was 0.4% higher at 2,212.75. Stocks rose in Taiwan but fell in Singapore and Indonesia.

ENERGY: Benchmark U.S. crude fell 82 cents to $62.78 per barrel in electronic trading on the New York Mercantile Exchange. It lost 31 cents to settle at $63.60 per barrel on Wednesday. Brent crude, the international standard, gave up 91 cents to $71.27 per barrel. It added 12 cents to close at $72.18 per barrel in the previous session.

CURRENCIES: The dollar rose to 111.55 Japanese yen from 111.38 yen late Wednesday. The euro strengthened to $1.1201 from $1.1198.

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