New York Fed President Bill Dudley, Atlanta Fed President Dennis Lockhart, and eventually San Francisco Fed President John Williams all stated their hawkish opinions last week regarding an expected rate hike that could be possible, twice even, before the end of the year. These statements gave an upbeat assessment of the US economy’s strength. Even Fed Vice Chairman Stanley Fischer has implied on Sunday that the possibility of Fed Chair Janet Yellen flagging up a rate rise at a meeting with the world’s central bankers on Friday is huge.
Because of this, world stocks edges lower and the dollar strengthened today on expectations that the Feds are gearing up to raise US interest rates. Immediately, the dollar index, which tracks the greenback against a basket of six other major currencies, rose 0.2% to 94.718 .DXY, pulling away from a six-week low hit last week after minutes of the Fed’s last policy meeting showed rate-setters split on when to hike. Because of the same reasons, the dollar index also firmed on Friday, 0.4% to 94.545, moving away from eight-week lows touched on Thursday.
Elsewhere, major stock markets also turned lower. France’s CAC-40 was down 0.4% to 4,384 in midday trading, after gains on the open in Europe, while Germany’s DAXX was axed 0.7% to 10,466. London’s FTSE 100 dropped 0.6 points at 6,821. Wall Street looked set for modest losses, with futures for the Dow Jones industrial average down 0.3% and Standard & Poor’s 500 index down 0.2%.
Asian stocks also closed low. The Shanghai Composite Index lost 0.7% to 3,084.81. India’s Sensex lost 0.1% to 28,036.76 and Taiwan also declined.
The price of oil, like the world stocks, also dipped as analysts doubted upcoming producer talks would rein in oversupply. Brent crude futures LCOc1 were trading at $49.94 per barrel, down $1.56 or 3.07%, while US crude CLc1 fell 2.7% to $47.20 after gaining 9% last week, rising for a second straight week.
World Stocks Recap
On Friday, the Stoxx Europe 600 Index dropped 0.7% at 10:25am in London, close to a 1.6% weekly decline, its trading volumes about a third lower than the 30-day average. The worst performing index in the world this year, Italy’s FTSE MIB, toppled 1.9%. Intesa Sanpaolo SpA is the biggest decliner on the index with a 3.1% drop.
S&P 500 Index futures retreated 0.3%, indicating equities wull decline after Thursday eking out gains. Applied Materials Inc. grew 6.5% in European trading after the biggest maker of machinery used to manufacture semiconductors predicted revenue and profit that may surpass estimates.
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