Global stocks tread water after hitting record highs, as all eyes turn to the Federal Reserve

Fed Chair Jerome Powell will likely announce a reduction in bond purchases. Pool/Getty Images
As investors waited for a Fed decision, global stocks were little affected on Wednesday.

It is expected that the world's largest central bank will reduce its bond purchase.

Oil prices fell elsewhere as the US pressed oil-producing countries to increase their supplies.

On Wednesday, global stocks were little changed as investors awaited Federal Reserve's latest decision. This will likely see the central bank begin to reduce its support for the economy.

Equities reached record highs on the previous day. The Dow Jones closed above 36,000 for first time in a strong third-quarter earnings season.

Wednesday's Dow Jones and S&P 500 futures were about flat. However, the Nasdaq 100 futures were 0.1% higher.

China's CSI 300 index fell 0.2% overnight after Beijing stated that the economy is facing new "downward pressures." Japanese markets were closed on Monday due to holiday.

Europe's Stoxx 600, which covers the continent of Europe, was approximately flat. Britain's FTSE 100 however, fell 0.35%.

After a two-day meeting, Wednesday's main event will be the Federal Reserve's decision on monetary policy.

Analysts expect the Fed will announce that it will begin "tapering", which is cutting back on its $120 billion monthly bond purchases.

In order to calm the markets and encourage lending, the purchases were made in 2020. However, policymakers worry about high inflation and believe the economy can manage on its own.

James Knightley, chief international economist of ING, a bank, stated that "substantial additional progress" has been made in both the inflation and employment areas.

"With the [quantitative ease] program complete and COVID cases subsiding it is time for us to announce a slowing of asset purchases."

Continue reading: A senior research analyst from a $437 billion company says that the S&P 500 is set to rise by as much as 30% over the next few months.

Investors are assuming that the Fed will taper purchases of $15 billion per month. Now, the focus is on when the central bank will increase interest rates.

According to CME's Fedwatch instrument, markets are still divided over the question of interest rates. However, they are pricing in the expectation that the Fed will raise rates in June next year. Investors will closely monitor Wednesday's signals regarding interest rates.

As it deals with rising inflation, the Bank of England will likely be the first major central banks to raise interest rates on Thursday.

On Wednesday, bond markets were calm with the yield of the 10-year US Treasury Note down slightly to 1.523%.

Investors can now look beyond concerns about central banks pulling stimulus. A strong third-quarter earnings season has helped to push stocks to new heights. After posting strong results, Under Armour and Pfizer saw their shares rise on Tuesday.

Oil prices dropped elsewhere in the markets after the US urged the OPEC+ group oil-producing nations to increase production ahead its meeting on Thursday. They claimed that high energy prices are fuelling inflation.

Brent crude crude fell 1.64% to $83.32 per barrel on Wednesday. WTI crude was lower at $82.31 per barrel, or 1.91%.

The cryptocurrencies have continued to ride high with bitcoin hovering around $63,000, and ether climbing to an all-time high above $4,600.