Those remarks sent stocks soaring and the dollar lower in Monday trading, but Wall St has reverted to a downward bias this morning.
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U.S. stocks opened lower on Tuesday, as investors kept a close eye on oil prices and pondered over when the U.S. Federal Reserve would hike interest rates.
OIL: Crude prices fell Tuesday after the Paris-based International Energy Agency said it believes global demand for oil will grow by 1.3 million barrels a day in 2016. Meanwhile, France’s CAC 40 was up 0.13%. Platinum gained 0.1 per cent at $1033.73.
In equities, the Dow Jones Industrial Average closed 1.4 percent lower at 18,066.75 on Tuesday. Her speech followed comments by Boston Fed President Eric Rosengren, who said last week the U.S. economy could overheat if the central bank waited too long to tighten, potentially spurring a global rout in equities. Had she signaled a change of heart, it might have convinced investors that a hike was coming next week, especially after another dove, Boston Fed chief Eric Rosengren, said on Friday that there’s case for higher rates.
Investors in the USA stock market liked Brainard’s speech.
“Brainard thinks asymmetric risk in the “new normal” economy calls for monetary prudence in the removal of policy accommodation”.
“While this doesn’t necessarily mean that rates will go up in September, it still causes uncertainty which historically stocks rather dislike”, said Markus Huber, a trader for City of London Markets.
ANALYST’S COMMENT: “The continuous debate surrounding the prospect of a USA rate rise continues to dominate market sentiment as US policymakers continue to gear up the markets for a further rate rise later this year”, said Michael Hewson, chief market analyst at CMC Markets. The move comes a little more than a year after activist investor Carl Icahn disclosed that he bought a stake in Freeport-McMoRan.
ASIA’S DAY: Earlier, Asian stocks mostly rallied.
Investors also appear to have given up the idea of an imminent rise in USA rates as can be seen in holdings of gold in physically backed exchange-traded funds, which are down 1.7 percent at 56.27 million ounces since August 5.
The yield on the benchmark 10-year Treasury note fell 2 basis points to 1.653 percent, the yield on 5-year bond dipped more than 1 basis point to 1.190 percent and the yield on short-term 2-year note slid almost 1 basis point to 0.766 percent by 11:00 GMT.
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But most other major indexes around the world, from Germany’s DAX to the Hang Seng in Hong Kong, were lower on Monday. The group expects weaker growth because of a more pronounced slowdown in the global economy.
