Future prices don’t always mirror levels at the opening bell.
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FED WATCH: Testifying before a committee of the U.S. Congress, Federal Reserve Chair Janet Yellen described the USA economy as “performing well” and an interest rate hike in December as a “live possibility” if the economy stays on track.
“Until December, investors will look at each and every economic data and comments from central bank officials showing that they are in control”, he added.
The market is going to have to come to grips with a rate hike in December for another reason.
After seven years of near-zero interest rates, a hike would demonstrate faith in the overall health of the USA economy – inversely leading to a negative sentiment forming around safe-haven assets like gold.
Platinum fell 0.7 per cent to $US945.50 an ounce and silver dipped to a one-month low of $US14.90 an ounce.
Hours after Yellen’s testimony in Washington, New York Fed President William Dudley – another influential FOMC member – said he agrees. If the Fed waits too long, it may be forced to raise rates quickly – which may spook stock markets. Jeremy Lawson, chief economist at Standard Life Investments said: “Emerging markets are facing a few stiff headwinds particularly in the form of a historic China transition away from manufacturing-led growth and an entrenched slowdown in global trade”. Japan’s Nikkei Stock Average rose 1% while Australia’s main index was down 0.9%.
Watch out savers, home buyers and investors: America’s interest rates could finally go up in December. Market participants are now waiting for the USA non-farm payrolls report due later in the day for indications on the strength of the economy and how it would affect the Federal Reserve’s monetary policy. The dollar rose more than 1 percent against sterling after the Bank of England kept rates unchanged at 0.5 percent and gave no suggestion it was in any hurry to raise them.
The stronger dollar added further pressure to crude oil futures, which were already dragged down by oversupply concerns.
In corporate news, shares of AstraZeneca climbed 3% after the drug maker raised its revenue and earnings forecasts for the year following better-than-expected third-quarter results.
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Brent North Sea crude for December, the global benchmark for oil, dropped to $US47.98 a barrel in London on Thursday, down US60c from Wednesday’s settlement. It hit $1,102.35 in the previous session, the lowest since September 11, and was heading for a 3 percent decline for the week, the sharpest such slide since the end of July.
