Other regional markets were mixed, rising in Australia and Indonesia and falling in Taiwan and the Philippines.
Advertisement
The spectacular labor market recovery in October is feeding speculation of a USA interest rate hike this year despite lackluster wage growth. Ms. Yellen reiterated the view Wednesday during her testimony before lawmakers, saying that December is a “live possibility”. But based on recent comments from central bank officials, “it looks as if as long as we hit a 150-number, the Fed will think it’s consistent with labour tightening”, she said, adding that USA yields and futures were increasingly showing expectations for a December hike.
The Dow Jones industrial average fell 4.15 points, or 0.02 percent, to 17,863.43, the S&P 500 lost 2.38 points, or 0.11 percent, to 2,099.93 and the Nasdaq Composite dropped 14.74 points, or 0.29 percent, to 5,127.74.
“Yellen noted that the U.S. economy is performing well and that if dataflow remained solid then a December rate hike would be a live possibility”, they said. “The main driver behind the down move is that more market participants now believe that the Fed will begin raising rates this year”, Commerzbank analyst Daniel Briesemann said. “There is a strong momentum for the dollar as rate hike chances for December have improved”, said Yujiro Goto, currency strategist at Nomura.
The euro has fallen 5.6 per cent against the pound since mid-October.
Traders are likely to tread cautiously before the BoE releases its quarterly inflation report as well as an interest rate decision and the minutes from its latest Monetary Policy Committee meeting. It last traded at US$1.0862.
Fed Chair Janet Yellen said on Wednesday that the United States was ready for higher interest rates if upcoming economic data justified them, pointing to a possible December rise.
Global markets have been responding noticeably to the Fed’s statement yesterday hinting towards a December interest rate hike if market conditions continue heading in the same direction.
The Philadelphia SE Gold/Silver index was down 4.5 percent and copper fell 2.4 percent, hitting its lowest since September 11.
Advertisement
But the dollar ticked lower against the yen, edging down to 121.50 yen from 121.55 Wednesday in New York, after trading in New York at its highest level since August on Yellen’s comments. According to the report, the crude oil inventory rose by 2.8 million barrels for the week.
