Most Asian stocks slipped Monday on remarks from the U.S. Federal Reserve late last week that the case has strengthened for raising interest rates, but the Tokyo market was an exception and gained on prospects for a strong dollar.
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Federal Reserve Chair Janet Yellen painted a rosy picture of the USA economy at an economic symposium on Friday and said the case for a rate hike was strengthening, but gave little indication on when the central bank could next move.
She did not indicate when the USA central bank might raise rates, and euro zone bond yields closed lower on Friday. Palladium rose 0.6 percent after touching a five-week low of $670.72 in the previous session.
The dollar pared gains against the yen after extending Friday’s rise and reaching a roughly three-week high of 102.39 yen in early trading.
Spot gold was down 0.8 per cent at $US1,312.71 an ounce by 2.49 pm EDT (0449 Wednesday AEST), after falling as low as $US1,311.65, the lowest since July 21.
The CME Group’s FedWatch tool showed the market pricing in more than a 30 percent chance of a hike in September, up from 18 percent before Yellen and her deputy Stanley Fischer spoke.
The Nasdaq Composite was up 11.42 points, or 0.22 per cent, at 5,230.34.
“While we have seen some outflows from exchange-traded funds, investors are relatively happy to hold gold, considering the environment of low-interest rates and negative yield”, said ANZ analyst Daniel Hynes. Since both Yellen and Fischer have signaled that they are data dependent the report will play a crucial part on the decision of rate hikes.
MSCI’s all-country world equity index was last down 0.5 points, or 0.12 per cent, at 417.92.
Europe’s broad FTSEurofirst 300 index .FTEU3 closed down 0.17 percent, at 1,350.4. That followed gains of 1.3 percent on Friday, its biggest one-day advance in nearly seven weeks. Benchmark 10-year U.S. Treasury yields were last at 1.570 percent, from a yield of 1.566 percent late Monday.
At the same time, oil prices were a touch firmer, with West Texas Intermediate up 0.7% at $47.31 and Brent crude up 0.5% at $49.52.
“If the payrolls figure is strong, the dollar could move toward a test of the 105 level against the yen”, said Mitsuo Imaizumi, chief currency strategist at Daiwa Securities in Tokyo. USA gold futures were flat at $1,317.80. US shares were also set to drift lower, with Dow futures shedding almost 0.1 percent to 18,367.
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Shares of Apple fell 1 percent to $105.71, premarket, after European Union antitrust regulators ordered the iPhone maker to pay $14.5 billion to the Irish government, ruling that a scheme to route profits through Ireland was illegal state aid.
