Overnight, gold prices inched higher for the first time in five sessions on Tuesday, as investors continued to weigh up prospects for future USA interest rate increases following the latest comments from Federal Reserve officials.
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Republican Presidential candidate Donald Trump accused the Fed on Monday of keeping interest rates low because of political pressure from the Obama administration.
KEEPING SCORE: France’s CAC 40 was almost flat at 4,338.81, while Germany’s DAX added 0.2 percent to 10,403.18.
Overnight, the MSCI Asia Pacific Index fell 0.1% with Japan’s Topix index ending the session little changed. At the close of trading in Tokyo, the Nikkei 225 added 0.34%.
USA gold futures eased 0.1 percent to $1,321.90 an ounce.
Hong Kong’s Hang Seng Index fell 0.3 per cent, reversing earlier advances, amid speculation that better-than-expected Chinese economic data will deter policy makers from easing monetary policy.
Official data showed that China’s industrial output climbed an annual 6.3 percent in August – beating forecasts for a gain of 6.2 percent and up from 6.0 percent in July.
FED FACTOR: The current focus in markets is whether the Fed will raise interest rates at its meeting next week.
The Labor Department is due to release U.S. consumer price index data for August on Sept 16. The Fed could raise interest rates next week, but investors aren’t sure the economy is healthy enough to handle it.
The Federal Open Market Committee, the Fed’s monetary policy arm, is set to meet on September 20-21.
United States stocks racked up their strongest gain in two months on Monday, with the Dow rising 1.3 per cent and the S&P 500 gaining 1.5 per cent. Against the yen, the dollar inched up 0.1 percent to 101.96 yen, after falling 0.8 percent on Monday. “Last night’s comments from Brainard acted as a neat counterweight to recent hawkish rhetoric”. After two months of quiet trading, stocks are on track for their third big move in a row, after a big drop Friday and a rally on Monday. The yield on the 10-year Treasury note rose to 1.74 percent from 1.67 percent.
Later in the United States, import prices and crude oil inventories are slated for release.
Crude oil prices dipped as investors sold into the previous day’s gains and on concerns over increased drilling in the United States.
One-month Libor slipped to 0.52428 percent from Monday’s 0.52772 percent, which was the highest since March 2009.
Meanwhile, the markets pondered political developments in the United States and their potential financial implications.
“The Fed is divided between hawks and doves, but they will surely prepare the market fully before a hike, which is why after this speech it seems unlikely next week”, said DZ Bank analyst Birgit Figge.
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Presidential candidate Clinton nearly collapsed at an event on Sunday, suffering from pneumonia, although she said on Monday she could resume campaigning in a couple of days.
