Overnight, gold prices inched higher for the first time in five sessions on Tuesday, as investors continued to weigh up prospects for future US interest rate increases following the latest comments from Federal Reserve officials.
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Spreadbetters expected the upswing for equities to continue in Europe, forecasting a higher open for Britain’s FTSE, Germany’s DAX and France’s CAC. This put pressure on the energy and commodity sectors of the broad index. In Hong Kong the Hang Seng shed 3.4 percent.
USA stocks ended Monday’s session sharply higher, after Fed Governor Lael Brainard said it would be wise for the central bank to keep monetary policy loose. “We can stick with our main scenario that the Fed won’t raise rates in September. That is on the back of rising uncertainties about central banks’ ability to stimulate their economies and of course the speculation that the Fed is getting closer to a rise in rates”.
Future traders are now pricing in a 15 percent chance of a hike at the Fed’s September 20-21 policy-setting meeting, down from 21 percent earlier on Monday, according to the CME Group’s FedWatch Tool.
WALL STREET: The Dow Jones industrial average gave up 1.4 percent to 18,066.75. World stock markets and energy prices fell as the US dollar rose 0.5 percent.
The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.29 percent at 95.372 .DXY .
“Headwinds from overseas should matter to United States policymakers because recent experience suggests global financial markets are tightly integrated, such that disturbances emanating from Chinese or euro-area financial markets quickly spill over to USA financial markets”, Brainard said. When looking at last Friday’s price action, all major USA indices dropped by more than 2%., Wwhile gold and US 2-years treasury bonds, which are supposed to be more sensitive asset classes to changes in monetary policy, just fell slightly. Japan’s Nikkei 225 gained 0.3 percent to 16,729.04 and South Korea’s Kospi rose 0.4 percent to 1,999.36 as Samsung Electronics, in the midst of a recall of its Galaxy Note 7 smartphones, gained 4.2 percent, recovering more than half of Monday’s loss. Spot gold was down 0.7 percent at $1,317.47 an ounce by 3:03 p.m. EDT (1903 GMT). U.S.
Crude oil prices dipped as investors sold into the previous day’s gains and on concerns over increased drilling in the United States.
Brent crude was down 0.7% at $47.98 a barrel after rising 0.65% overnight on a weaker dollar and stronger U.S. equity markets. This followed on from Asia’s lead, after talk of a rate rise in the U.S. dampened amongst traders.
PERRI-GOING UP: Irish drug and ingredient maker Perrigo added $4.87, or 5.5 per cent, to $93.58 after the activist investment firm Starboard Value bought a 4.6-per cent stake in the company.
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Meanwhile, the markets pondered political developments in the United States and its potential financial implications.
