A sector rotation in stocks won’t necessarily mean the S&P 500 will gain much over current levels, while the heightened probability of a USA rate hike won’t be a death blow to the market’s rally, according to Jim Paulsen, chief investment strategist at Wells Capital Management in Minneapolis.
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Saying he is in no hurry to raise rates, San Francisco Federal Reserve Bank President John Williams nevertheless warned that the economy could overheat if rates are kept low for too long, like a party at which the host fails to remove the punch bowl.
Europe’s main bourses all followed Asian stocks higher, climbing 0.3-0.4 per cent to break off from a losing streak suffered at the start of the week.
There have been mixed signals this week from Federal Reserve policymakers, leaving the market anticipating more direction at next week’s annual meeting of central bankers from around the world in Jackson Hole, Wyoming, at which Fed Chair Janet Yellen is seen likely to cement expectations for a slow pace of rate increases.
The Dow Jones industrial average closed up 22 points, or 0.12%, to 18,574, the S&P 500 had gained four points, or 0.19%, to 2,182 and the Nasdaq Composite had added two points, or 0.03%, to 5,229. The Nasdaq composite inched up 1.55 points to 5,228.66.
“Some Japanese investors, commercial orders, are still interested in buying dollars on any move to 99 yen, so some short-term guys are not testing the downside today”, said Global-info Co’s Ogino.
Now, though, Williams and several colleagues who called for caution earlier this year are back to advocating more strongly for rate hikes, emboldened by continued strong job gains and signs that inflation is back on track towards the Fed’s 2-percent goal.
United Kingdom month-ahead natural gas dropped 5.3 per cent to 29.2 pence a therm, the lowest since May, as supply was forecast to exceed demand. Tokyo’s Nikkei 225 slid 1.5 percent to 16,486.01. Its stock sank $1.62, or 12.1 percent, to $11.76.
Estee Lauder (EL.N) was down 3.9 per cent at US$91.40 as the cosmetics maker’s quarterly sales rose less than expected.
The benchmark S&P 500 index is up 7 per cent this year.
OIL: The Energy Information Administration said USA crude oil inventories shrank by 2.5 million barrels last week and gas stockpiles decreased by 2.7 million barrels.
After starting the day on a subdued note, gold and silver remained weaker throughout the day amid a recovery in the USA dollar. Brent crude, used to price global oils, lost 16 cents to $49.69 in London. Gold, silver and copper also fell. Hong Kong is Chinese territory but its financial system is open to foreign investors while mainland markets are sealed off.
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OVERSEAS: France’s CAC-40 dropped 1 percent while Germany’s DAX shed 1.3 percent. The dollar against a basket of six major currencies was up about 0.31 percent at 94.447. South Korea’s Kospi rose 0.9 percent.
