Fed: Surprise on the dovish side - Westpac

Watch the Fed's Press Conference Wednesday

MSCI's gauge of stocks across the globe rose 0.02 percent and emerging market stocks fell 0.03 percent.

Higher interest rates tend to push up the value of the Dollar because they attract and keep more foreign capital from investors drawn to the promise of higher returns.

A record number of balance-sheet bombs are threatening the stock market's health.

"The dovish Fed has a lot to do with emerging market outperformance because if the Fed isn't going to hike you have dollar stability and you get a change in perception", said Kathryn Rooney Vera, head of research and emerging market strategy at Bulltick LLC in Miami.

"Global economic growth has deteriorated in recent months", he said, noting that the U.S.

The Federal Reserve's policy twist on Wednesday might seem just what the White House ordered, with a hold put on what President Donald Trump termed "loco" interest rate hikes, and an openness to ending the monthly runoff of up to $50 billion from the USA central bank's balance sheet.

Investor caution is also mounting ahead of USA jobs data later in the session with analysts unsure what impact the government shutdown might have had employment.

The economist likens the situation to that of the cycle in 2004-6 when the Fed hiked interest rates 17 times to a high of 5.0%, and although he does not expect interest rates to rise as high as that in this cycle, the pattern will probably be similar.

Sales in Southern California fell over -20% in the same period, the slowest rate since 2007, and triggered even deeper concerns about the state of the housing market in the US and the broader economy.

However, broader risk sentiment still remained fairly strong after US President Donald Trump said yesterday he would meet with Chinese President Xi Jinping soon to try and seal a comprehensive trade deal as the top US negotiator reported "substantial progress" in two days of high-level talks.

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The top US negotiator at the talks reported "substantial progress" in the talks.

Beijing's trade delegation said the talks made "important progress" for the current stage, China's official Xinhua news agency reported on Friday.

In late NY trading, the euro increased to 1.1460 dollars from 1.1444 dollars in the previous session, and the British pound was down to 1.3082 US dollars from 1.3111 dollars in the previous session.

The Australian dollar, a liquid barometer of investor sentiment toward China, skidded 0.5% after the Caixin/Markit index of manufacturing fell to its lowest since February 2016. "Both sides also have an incentive, and arguably a growing incentive, to get a meaningful deal done".

U.S. West Texas Intermediate (WTI) crude futures were at $54.47 per barrel, up 24 cents, or 0.4 percent, from their last settlement.

The Indian rupee rose 0.1 percent to 71.04.

The estimated first-quarter earnings growth rate for the S&P 500 companies has declined to 0.7 percent from 5.3 percent on Jan 1, Refinitiv said. The Nasdaq gained 9.7% in the month and the Dow rose 7.2%.

Against a basket of currencies, the dollar was down 0.1 percent at 95.506.

The euro weakened when Bundesbank President Jens Weidmann painted an unusually bleak picture of the German economy, saying the slump would last longer than initially thought. Shorter maturities led gains, steepening the yield curve. A major factor in the change of policy is the slowdown in China and Europe.

With U.S. growth expected to slow to perhaps 2 percent and risks accumulating, "we are not in a great position to take a shock", said Omair Sharif, senior U.S. economist at Societe Generale.

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