The U.S. dollar was mostly flat against a basket of major currencies on Monday on hesitation to make bets ahead of a speech from the Federal Reserve Chair on Friday, while comments from another top Fed official kept the greenback stable.
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LOW ENERGY: Energy companies fell as a rally in oil prices last week reversed, with sharp losses on Monday.
United States stocks zig-zagged in early trading, opening lower, regaining momentum to turn positive, and then dropping again.
Oil prices sank more than one percent after last week’s rally after Iraq said at the weekend that it intends to increase shipments, according to Bloomberg News, while USA firms again increased their rig count.
On Wall Street, the Dow .DJI had ended Monday down 0.12 percent, while the S&P 500 .SPX lost 0.06 percent and the Nasdaq .IXIC added 0.12 percent.
Futures on the China A50 Index were little changed in their most recent trading, while those on the Hang Seng Index slipped 0.4 percent.
DRUG DEAL: Cancer drug maker Medivation jumped $13.34, or 20 percent, to $80.49 after pharmaceutical giant Pfizer announced it would buy the company for $14 billion, or $81.50 a share.
The weaker yen helped Japan’s Nikkei stock index to end 0.3 percent higher, while Hong Kong added 0.3 percent although other markets struggled.
Oil settled down more than 3 percent on Monday, retreating from last week’s two-month highs, on worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising US oil rig count. The Brent crude oil price was last at $48.53 per barrel, down 1.12 percent and the Texas light sweet crude dipped 1.52 percent to $46.65 so far on Tuesday. Energy stocks declined more almost 1%, while most sectors finished mixed to lower after a volatile session.
An upbeat assessment of the U.S. economy’s strength from Fed Vice Chairman Stanley Fischer on Sunday was viewed as raising the prospect of Fed Chair Janet Yellen flagging a rate rise at a meeting with world central bankers on Friday.
Here, Fed chair Janet Yellen may give further guidance on USA rates.
While investors do not expect the central bank to raise interest rates at its September meeting, there’s always the possibility and the increasing likelihood of a rate increase once the presidential election is finished.
“There is still around a month until the next meeting on the September 21 and the Fed will likely feel it is too early to commit to a rate hike at this stage”. Second quarter earnings season is effectively over and the next major piece of economic data does not come until Friday, when Yellen will speak.
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”.
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The two-year Treasury yield rose to a post-Brexit high of 0.7830 percent after Fischer said he thought the central bank was close to achieving its employment and inflation targets.
