The U.S. central bank will be of key importance this week for investors, as its Chair Janet Yellen , is set to give a speech on August 26 at the Federal Reserve Bank of Kansas City’s annual Economic Policy Symposium at Jackson Hole, Wyoming.
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The oil price, in particular, has had a massive rally, entering a technical bull market last week after rising more than 20 per cent from its recent lows. Brent crude, used to price Global oils, tumbled 83 cents to $50.05 per barrel in London.
In the currency market, the dollar traded up against a basket of currencies, with the dollar index at 94.750, compared with levels near 94.100 late last week.
Oil prices fell nearly 2 percent in Asian deals to snap a seven-day winning streak, as the dollar strengthened against rivals and news emerged that Iraq will boost crude exports.
Gold fell to a two-week low on Monday following upbeat comments on the US economy from a senior Federal Reserve official.
Gold fell further in Asia on Monday and silver dropped sharply as investors noted comments by Federal Reserve Vice Chair Stanley Fischer that appeared to raise prospects for a near-term rate hike by the Federal Reserve.
Bullion has gained over 25 percent this year, as commodity prices recover and investors continue to look for “safe haven” investments amid global economic uncertainty and a depressed bond yield environment. The price of the 1.5 percent security due in August 2026 fell 1/8, or $1.25 per $1,000 face amount, to 99 5/32.
U.S. crude slumped 1.7 per cent to $US47.68 ($A62.77) after gaining nine per cent last week, rising for a second straight week. Banks ANZ, Westpac and Commonwealth closed down between 0.2 percent and 0.5 percent. Medivation Inc.’s stock soared more than 19 percent before the opening bell Monday. How commodities fare this week in what could be a strengthening United States dollar environment, could tell us a lot about the conviction behind the rally in a lot of spot prices.
This comes on the heels of last week’s U.S. Federal Reserve minutes from its July meeting which indicated that a rate hike is not imminent. Market bellwether Samsung Electronics eased 0.6 percent on profit taking after two days of record-breaking bullish run. Z Energy, Spark New Zealand, A2 Milk, Metro Performance Glass and Michael Hill rallied 2-4 percent. Benchmark indexes in Indonesia, Singapore and Taiwan were down between 0.2 percent and 0.6 percent while Malaysian shares were marginally higher.
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In comments prepared for The Aspen Institute’s “Program on the World Economy”, Fischer said employment has “increased impressively” since a 2010 low after the national financial crisis, and the unemployment rate has hovered near 5% for the a year ago. While stocks haven’t made many big moves this summer and the S&P was flat last week, there are signs investors feel comfortable enough to take bigger risks.
