It is to be said that despite the choppy financial weather, the European MSCI 46 country share index went for a 0.2 percent gain post an excellent day for the Asian markets. But The Wall Street Journal said last month’s report “reinforced market expectations that the Federal Reserve will push off a rate increase until December at the earliest”. Emerging markets have been cautious as a Fed rate hike could mean a stronger dollar which, in turn, could weaken their currencies – a repeat of the events that unfolded after the Fed made a decision to roll back its bond-buying program in December 2013. The Institute for Supply Management’s non-manufacturing index slumped to 51.4, the lowest since February 2010, from 55.5 in July, a report from the Tempe, Arizona-based group showed Tuesday. According to Fed Chair Janet Yellen, the economy needs to create just under 100,000 jobs a month to keep up with population growth, and employers have added jobs at a monthly pace of 182,000 so far this year.
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“When rates are low like this it’s hard not to have a good stock market”, he also said.
The San Francisco president had remarked last month about the necessity of a near-term rate increase, but a mixed jobs report and recent weak survey readings for the manufacturing and services sectors since then had led some investors to downgrade their expectations for an interest rate increase, at least at the Fed´s policy meeting on 20-21 September.
Also bolstering the yen was the Sankei newspaper’s report saying Bank of Japan policymakers were divided ahead of the central bank’s September 20-21 meeting, at which BOJ Governor Haruhiko Kuroda has said the board will conduct a comprehensive assessment of its massive stimulus programme. “Therefore, they’re trying to raise interest rates without really spooking the market too much”.
US bond yields fell, with policy-sensitive two-year notes yield falling to 0.730 percent, its lowest since August 19, down from 0.853 percent marked on August 29. While the U.S.is on a long streak of job growth, reports over the last few months have been inconsistent.
The U.S. dollar (DXY) is now trading at 95.60, down 0.18% from Monday’s levels.
CURRENCIES: The euro was steady at $1.1150 while the dollar fell 0.6 percent to 103.39 yen. South Korea’s Kospi gained 1.1 percent to 2,060.08.
“When it will happen and if it will happen will depend on what we are seeing”, he said, adding that he had not yet weighed the effect of the latest data showing a slowing services sector.
Though oil prices ended lower, the S&P 500’s energy index rose 1.5 percent, helped by Enbridge’s (ENB.TO) acquisition of Spectra Energy (SE.N) for about $28 billion. The euro rose to $1.1255, its highest since August 26 after the data.
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Crude oil futures pared gains, but closed higher on Tuesday amid receding hopes for a deal between Russian Federation and Saudi Arabia to freeze output to tackle a global supply glut.
