Asian stocks were mostly higher on Tuesday after a Federal Reserve board member said she was in no hurry to raise interest rates, reassuring investors who were anxious that the rate hike could pull share prices lower. Toward 1800 GMT, while the S&P 500 was up 0.9 percent.
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Goldman Sachs found that with 90% of past rate hikes, markets had priced in at least a 70% probability of an increase the day before the meeting – far from the current 15%. Though Yellen and other top Fed officials had indicated that an increase of just under 100,000 would suffice, market players still saw the data as failing to clinch the argument for a rate hike.
Although her speech was much anticipated (with a potential hawkish shift adding support for a September hike), her dovish tone is not particularly shocking, given her past commentary.
TOKYO (AP) – Asian shares mostly sagged in sluggish trading Wednesday on concerns over weaker global growth and uncertainty about the U.S. Federal Reserve’s plans for interest rates.
US oil prices closed down 3% at $44.90 a barrel after the International Energy Data released bearish demand-growth data in its monthly report Tuesday. Brent crude, the benchmark for global oil trading, lost 88 cents to $47.44 a barrel in London.
Stocks had plunged Friday following remarks from another Fed official that suggested interest rates could go up next week.
Minneapolis Fed President Neel Kashkari said “politics does not play a part” in the Fed’s deliberations and that current low US inflation means there is no “huge urgency” to hike.
Investors were also focused on euro zone data which showed German August harmonized inflation fell 0.1 percent month-on-month, but was up 0.3 percent year-on-year. Those remarks sent global markets reeling, with USA and European shares plunging Friday and Asia tanking Monday.
Rate concerns look set to return to USA stock trading Tuesday, with S&P 500 futures at session lows, down 15 points, after equities there rebounded Monday to their biggest gains in two months.
In Frankfurt, utility E.ON fell 2.89 percent, to extend Monday’s losses after it spun off its traditional gas and coal operations into a separate firm. But the federal government temporarily stopped the project and several agencies said they will reconsider some of their decisions.
Brainard’s remarks stressed a “new normal” for the US economy. After two months of quiet trading, stocks are on track for their third big move in a row, after a big drop Friday and a rally on Monday.
The gains also follow news that the firm had offloaded its printer business to U.S. giant HP for more than a billion dollars as it presses ahead with a restructuring drive.
USA crude rose 41 cents to $46.29 a barrel in NY. Verizon shed $1.12, or 2.1 percent, to $51.45 and AT&T fell 74 cents, or 1.8 percent, to $39.97. Heating oil sank 2 cents to $1.42 a gallon.
Gold fell $8.90 to $1,325.60 an ounce.
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While the stock market’s fall was the main driver behind the yen’s rise, the Japanese currency got a boost earlier in the Asian session from safe-haven flows in reaction to Democratic candidate Hillary Clinton falling ill at a September 11 memorial ceremony and diagnosed with pneumonia.
