Global stock markets tumbled Monday, Sept. 12, 2016, as investors fretted over the possibility of an imminent USA interest rate hike and reacted to the weekend health problems of presidential candidate Hillary Clinton.
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The dollar, on the other hand, nursed losses against its peers after Brainard reiterated her dovish views and warned against a rush to raise rates.
Spread-betters expected the upswing for equities to continue in Europe, forecasting a higher open for Britain’s FTSE, Germany’s DAX and France’s CAC.
USA markets responded positively to Brainard’s comments, with the S&P 500 index rallying almost 1.5 percent on Monday, its best day since early July.
ASIA’S DAY: Japan’s Nikkei 225 gained 0.3 percent to 16,729.04 and South Korea’s Kospi rose 0.4 percent to 1,999.36 as Samsung Electronics, in the midst of a recall of its Galaxy Note 7 smartphones, gained 4.2 percent, recovering about 60 percent of Monday’s 7 percent loss. However, Hong Kong’s Hang Seng index lost 0.3 percent to 23,215.76, while Australia’s S&P/ASX 200 fell 0.2 percent to 5,207.80. Investors were unfazed by a run of relatively upbeat Chinese data that included industrial output, which rose a better-than-expected 6.3% in August, further dimming the expectation of a rate cut any time soon.
The dollar hovered moderately below ¥102 in late Tokyo trading on Tuesday amid receding expectations of an interest rate hike by the U.S. Federal Reserve this month.
The comments solidified the view the United States central bank would leave interest rates unchanged next week. “All the talk about a possible rate hike in September turned out to be noise”, said Koichi Yoshikawa, executive director of finance at Standard Chartered Bank’s Tokyo branch. Fed Funds rate futures are now pricing in only about a 15 percent chance of a rate hike at the Fed’s next policy meeting on Sept 20-21, according to CME Group’s FedWatch Tool. Futures on S&P 500 dropped 0.1 percent following a 1.5 percent climb in the USA benchmark that was its steepest advance since July 8.
The yen, which typically moves at odds with Japanese shares, was steady at 101.86 per dollar after gaining 0.8 percent last session as Brainard said the case for the Fed to raise rates was “less compelling”.
Wheeler has been thwarted from reaching his 2 per cent inflation target as the strength of the kiwi makes imports cheaper, and had to refrain from cutting interest rates too sharply for fear of inflaming an already hot property market.
European markets were up in afternoon as jitters over US monetary policy eased.
Yields continued to rise on Monday, as fears grew of a repeat of the “flash crash” of last year – when 10-year Bund yields rose 100 basis points in less than two months. Crude oil prices also dipped as traders sold off the prior day’s gains.
USA oil dropped to just above $46 a barrel.
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Copper climbed off a 12-week low as U.S. rate hike jitters subsided.
