Investors were looking ahead to “a relatively quiet week with (Fed chief) Janet Yellen headlining on Friday with her speech” at the Jackson Hole gathering of central bankers, said Craig Erlam, senior market analyst at Oanda trading group.
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“It has become clear in recent days that Fed officials are increasingly divided over the timing of when to move on rates next, and their constant briefings to the market aren’t helping in this regard, which probably explains why United States markets have struggled for direction in the past few weeks”, said Michael Hewson, chief market analyst at CMC Markets UK.
Around 1000 GMT, London’s benchmark FTSE 100 was down 0.4 percent compared with the close on Friday.
Some economists predict that a rate rise could come as soon…
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.2 per cent, after losing 0.3 per cent last week. Wall Street logged modest losses on Friday, ending almost flat for the week.
“Moves in the Japanese market will likely be dominated by the dollar-yen performances after the meeting”, said Masashi Oda, general manager of the strategic investment department at Sumitomo Mitsui Trust Asset Management.
Japan’s Nikkei rose 0.3 per cent, taking solace from a weaker currency ahead of the Jackson Hole meeting. It skidded 2.2 percent last week, as the dollar dipped below 100 yen.
The dollar rose against the euro and yen on Monday after the Federal Reserve’s vice chairman said the USA economy was picking up. New York Fed President William Dudley said last week a rate hike would be possible at the Fed’s next policy meeting in September. That said, we believe Chair Yellen will use the opportunity to signal the FOMC’s growing confidence in the outlook for activity and inflation given the rebound in labor markets since June and the solid rise in household spending in Q2 GDP.
Crude oil futures dropped, giving back some of their recent gains that propelled oil into bull market territory, after technicals had it in a bear market earlier this month.
United States gold settled down 0.8% at $1,346.2 per ounce. Brent crude was 0.9 per cent lower at $50.43 a barrel, after gaining 8 per cent last week, rising for a third week in a row.
LOW ENERGY: Energy companies fell as a rally in oil prices last week reversed, with sharp losses on Monday.
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Spot gold fell as much as 1.5% to a session low of $1,337.37 US per ounce, paring losses to trade down 0.6% at $1,344.41.
