Asian stocks were mostly higher on Tuesday after a Federal Reserve board member said she was in no hur.
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Expectations that interest rates would remain lower for longer have helped fuel a rally in a broad range of financial assets in recent months, from U.S. stocks to emerging-market bonds.
Volatility has returned to the markets lately, as an interest rate hike by the Fed as early as this month was taken into consideration, then dismissed, then considered again. While Brainard’s comments also played in to a generally more upbeat mood on stock markets, a fall in oil prices kept the Australian, Canadianand New Zealand dollars under pressure, with all three down more than half a percent. The biggest reason for the change is a more pronounced economic slowdown during the third quarter of the year. Prices briefly rose in early trade after data by the American Petroleum Institute showed a smaller-than-expected build in US crude stockpiles. Brent crude, the benchmark for worldwide oil prices, rose 35 cents to $47.45 a barrel in London.
Exxon Mobil sank $1.34, or 1.5 percent, to $85.95 while Chevron shed $1.66, or 1.6 percent, to $100.59 and Baker Hughes lost $1.58, or 3.2 percent, to $48.12.
But it also signalled that it could still decide to cut the rate further to just above zero before the end of the year.
The median probability provided by economists of such a move at the conclusion of the September 20-21 meeting was about one-in-four, slightly higher than market pricing, and only 6 per cent of those surveyed actually held that as their forecast. The yield on the 10-year Treasury note rose to 1.74 percent from 1.67 percent. He said the currency had not fallen as much as the RBA expected since 2013, largely because of aggressive easing policies by many other central banks around the globe. Low rates have fueled a steady rise in stock prices as investors put their money in high-risks stocks instead of low-interest savings accounts or bonds.
In what is probably best described as a see-saw action, the S&P 500 rose 1.47% on Monday, or around 31 points to finish at 2,159.
Iron ore miner Fortescue Metals Group rose 0.9 percent after saying it would repay $US700 million of its debt.
Brent crude limped up 0.5 percent to $46.07 a barrel after dropping 2.6 percent on Wednesday when data showing large weekly builds in US petroleum products offset a surprise draw in crude stockpiles. Some of the largest losses went to phone companies, which sank as higher bond yields made them less appealing as income-producing investments.
CHIP CHIP, HOORAY: Among the few gainers early Tuesday was chipmaker Intersil, which agreed to be bought by Renesas of Japan. Intersil climbed 1.94 dollars, or 9.8%, to 21.70 dollars. Weight Watchers more than doubled after the company announced an alliance with Oprah Winfrey, who bought a 10 percent stake and joined the company’s board of directors.
Brainard did not comment on the specific timing of future rate policy changes but she held firm in arguing for caution in what could be the last word from a Fed policymaker before the central bank’s September 20-21 meeting. However, the Hang Seng index in Hong Kong lost 0.3 percent.
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CURRENCIES: The dollar rose to 102.99 yen from 101.98 yen late Tuesday in Asia. The S&P 500 fell 1.4% to 2127.02 led by energy stocks. Britain’s FTSE 100 edged 0.1 percent lower to 6,692.22.
