Yesterday, Federal Reserve governor Lael Brainard urged caution over a decision to raise interest rates.
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“Brainard’s speech will be the last scheduled appearance from a Fed policymaker ahead of the pre-meeting blackout period and many market participants see this as a last opportunity to for the Fed to fine-tune expectations ahead of the meeting”, Credit Agricole analysts said in a note.
US stock index futures were lower on Tuesday as oil prices fell and investors reassessed the possibility of a near-term rise in USA interest rates. The FTSE 100 index of leading British shares was up 0.2 percent at 6,712. 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. Expectations that Wall Street was poised to pare some of Monday’s gains weighed on European markets though.
S&P 500 e-minis were down 12 points, or 0.56 percent, with 180,820 contracts traded. She argued that the “new normal counsels prudence in the removal of policy accommodation”.
Although delaying a rate hike might continue to provide some artificial support to equity markets I still believe that valuations are high and aren’t supported by economic fundamentals or corporate earnings.
US RATE FOCUS: The main point of interest in markets at the moment centers on the Fed and when it will raise interest rates again. “The dollar may rally 3 percent from here, but we think it is too early to assume a long-term rally to resume from here”, he added. 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.
Oil fell on Tuesday following a series of gloomy predictions on demand growth that suggested the global overhang of unused inventories may persist for much longer than investors anticipate.
Italy’s 10-year bond yield fell two basis points to 1.26 percent, declining from the highest since June, while Spain’s slipped three basis points to 1.06 percent.
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OIL: Benchmark U.S. crude fell $1.00 cents to $45.29 per barrel in NY.
