U.S. stock prices were slightly higher at midsession Monday after a Federal Reserve policymaker expressed caution about the need to raise USA interest rates, though European and Asian equities finished lower after the biggest fall on Wall Street since June on Friday.
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That helped push up yields on government bonds in the euro zone, many of which were negative, as well as yields in Japan, the United States and elsewhere. Oil sank to about US$45 a barrel as nickel tumbled the most in four weeks. Brainard’s speech is the last scheduled appearance by a central banker before this month’s policy meeting.
USA stocks plunged about 2.5 percent Friday, their biggest loss in two months, after Federal Reserve Bank of Boston President Eric Rosengren said there’s a case to be made the US central bank should raise rates sooner rather than later.
“When a traditional dove (in this case the FOMC’s Eric Rosengren) makes hawkish comments, the market sits up and takes notice”, said Richard Perry, market analyst at Hantec Markets, in a note.
The moves in Europe on Monday follow a awful day in Asia, where all major stock indices fell by around 2%, following the move in USA markets on Friday. “You want to wait and see and remain cautious”, he said.
US stocks had plunged late last week after Federal Reserve Bank of Boston President Eric Rosengren said there’s a case to be made the USA central bank should raise rates sooner rather than later. The odds for a rate hike next week sank to 22 percent, from 30 percent on Friday.
The Stoxx Europe 600 Index slid 1.8 per cent as of 8:14 a.m. London time. Australian stocks dropped 1.8 per cent.
The MSCI Asia Pacific Index slumped 2 per cent, led by losses in raw-materials producers.
In Japan, the Nikkei 225 was up 64 points, or 0.4%, at 16,737, while in Hong Kong the Hang Seng index was 204 points to the good at 23,489, up 0.9%. The losses Friday wiped out two months of gradual gains on the market.
The stock market is already falling in anticipation of the Federal Reserve’s second “bump” up in interest rates.
Markets overseas took sharp losses following the rout in the U.S. Friday.
Mining companies saw big falls, with BHP Billiton and Glencore down 4%.
AstraZeneca PLC shares (AZN.LN)(AZN.LN) rose 0.8% following an upgrade to buy from hold at Jefferies, citing potential prospects from the pharmaceutical company’s MYSTIC late-stage study of treatments for lung cancer. Yields on USA 10-year and 30-year paper hit 11-week peaks.
Yields on benchmark Treasuries were little changed at 1.67 per cent, after rising eight basis points in the last session. Technology companies also jumped.
Atlanta Fed president Dennnis Lockhart reportedly told reporters on Monday he would not comment on the probable likely actions by rate-setters when they next met in September, November and December. Twelve-month non-deliverable forwards indicate traders are the most bearish they’ve been on the yuan in nearly four months.
A gauge of equities across major markets fell 0.3% after losing 1.0% earlier. Brent crude LCOc1, the global benchmark, was down 82 cents a barrel at $47.50.
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By virtually all the established valuation methods, current US stock prices were between 52 percent and 97 percent overvalued at the start of September, according to the highly respected and independent Advisor Perspectives’ website, which publishes hundreds of stock market data points.
