“In just a couple of weeks the Fed seems to be less concerned about China and expectations are therefore again rising for an interest rate hike in December”, Petromatrix consultancy’s Oliver Jakob said.
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Malaysian shares fell for a fourth consecutive session Thursday, while the ringgit dropped to a one-week low, after the U.S. Federal Reserve indicated that it could raise interest rates in December.
The first estimate of third quarter US growth, released on Thursday, showed the world’s biggest economy expanded at a 1.5 percent annualised pace, sharply down from the previous quarter and below the expected 1.6 percent. Maybe the Fed finally moving off 0% rates could signal that the us economy can finally stand on its own two feet without the benefit of Fed steroid-like stimulus. Germany’s DAX was up 0.1 percent at 10,843.87.
The Shanghai Composite Index SHCOMP, +0.36% finished up 0.4%, as investors await possible announcements from the Communist Party’s annual plenum, where officials lay out China’s economic plan the next five years.
US futures followed European markets lower, indicating a 0.5% opening loss for the S&P 500. But in an exceptional statement the Fed added that it was looking for progress in the economy on deciding whether it would be suitable to raise the interest rate for December at its meeting next month. Reference to a particular meeting is rare for the Fed.
US stocks slipped Thursday, pulling back from a prior-day rally spurred by a Federal Reserve statement that many investors viewed as less cautious on the global economy.
As the FOMC (Federal Open Market Committee) wrapped up its two-day monetary policy meeting, as predicted they chose not to increase the Fed Discount Rate. Renaissance Macro’s Neil Dutta wrote in a client note, “First, the Fed is talking about raising rates as opposed to maintaining the current range”.
Others see Fed tightening boosting the USA dollar, which tends to have a negative impact on commodity prices, as they become more expensive for holder of other currencies, and higher interest rates making it more attractive for producers to increase output and invest the proceeds in financial assets for a better return, thus potentially boosting supply. Inflation remains flat, the September jobs report was disappointing and there were signs that manufacturing is getting hurt by the strong USA dollar.
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USA crude fell 1 percent to $45.56 a barrel.
