European stocks traded lower on Monday, while Asia-Pacific indexes closed mixed to lower overnight.
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Federal funds futures suggest traders saw a 53.5 percent chance of a rate hike this year, up from 48.8 percent on Thursday, CME Group’s FedWatch programme showed.
Stocks were moving mostly lower in early trading Monday, Aug. 22, 2016, as investors looked ahead to the Fed’s meeting in Jackson Hole, Wyo., for clues on timing for possible interest rate hikes. A drop in oil prices pulled energy companies lower.
Because of the production and storage overhang in fuel markets, Barclays said this month’s 20% price rally is unwarranted and that oil prices of $50 or higher are unsustainable.
Japan’s Topix index lost 0.3 percent as the yen traded at 100.12 against the USA dollar.
Investors will be looking to the Fed, to see if it provides any indications as to when it may raise interest rates, while giving a long-term outlook on the state of the US economy.
Despite a week of generally hawkish comments from Fed officials, investors are skeptical and looking for clear guidance regarding the Fed’s plan for interest rates and its assessment of the health of the US economy.
Emerging stocks and currencies also fell broadly on Monday. The Hang Seng Index HSI, -0.22% was down 0.4% with the Shanghai Composite Index SHCOMP, +0.16% almost flat and South Korea’s Kospi SEU, +0.38% up 0.2%.
The two sets of comments highlighted the divergence of monetary policy in Japan and the United States and provided much-needed support to the dollar, which last week fell below 100 yen following disappointing USA economic data. Fed Chair Janet Yellen is scheduled to deliver two speeches at the end of the week. The euro turned slightly negative, losing.04% against the dollar at $1.1305. Please see our terms of service for more information.
Brent crude futures were trading at $49.94 per barrel at 0712 GMT, down $1.56, or 3.07 percent.
ANZ Research’s Irene Cheung and Rini Sen said in a note that “a firmer dollar on the back of an expected hike by the Federal Reserve this year, coupled with some unwinding of RBI rate cut expectations in India’s asset markets, will likely see a rebound in dollar/rupee”.
In morning deals, the share price of major silver and gold producer Fresnillo slumped into a loss of 6.6 percent at 1,811 pence, Randgold shed 4.9 percent and miner Anglo American slid 4.6 percent. While the French CAC 40 Index edged down by 0.2 percent, the U.K.’s FTSE 100 Index and the German DAX Index fell by 0.4 percent and 0.5 percent, respectively.
Gold fell on Monday to its lowest in two weeks on talk of possible USA rate hikes, before recovering slightly.
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A couple of hours in to United States trading, spot gold was US$3 lower at US$1,338 having perked up a little since the start of the day.
