The S&P financial index.SPSY, which tends to rise with expectations for higher rates, slipped 0.2 percent, while the S&P utilities index.SPLRCU, which tends to benefit from a lower rate environment, rose 1.1 percent.
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Federal Reserve Bank of San Francisco President John Williams painted an upbeat picture of the US economy in a speech on Tuesday, despite recent disappointing data that have led investors to reduce their bets on an interest-rate increase later this month.
The San Francisco president had remarked last month about the necessity of a near-term rate increase, but a mixed jobs report and recent weak survey readings for the manufacturing and services sectors since then had led some investors to downgrade their expectations for an interest rate increase, at least at the Fed´s policy meeting on 20-21 September.
In the currency market, the dollar fell more than 1 percent against the yen, euro, pound, Australian dollar and other major currencies during the US Tuesday session.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4 percent, extending its chunky gains of 2.7 percent over the last two days, to claim a level last seen in July a year ago.
Naturally, the dollar has been sliding and the rest of the currencies and commodities are benefiting from that.
The dollar has taken a major beating this week after several U.S. economic data surprised the market to the downside.
“Markets are expected to be quiet till European Central Bank’s interest rate decision on Thursday”, said Kent Li, deputy in-charge for bullion desk, Wing Fung Precious Metals.
“The number on Friday was weaker than expected, but it was still stronger than what was indicated would be enough to promote a further rate hike”, said Matt Maley, an equity strategist in NY at Miller Tabak & Co.
Dow e-minis 1YMc1 were up 16 points, or 0.09 percent, with 30,470 contracts changing hands.
Platinum rose 0.2 percent to $1,097.80. Copper (CMCU3) hit a two-week high at $4,683 a tonne, while gold (XAU=) hit a 2 1/2-week peak above $1,352 an ounce before pulling back.
Automaker Toyota is losing more than 1 percent and Honda is down 1 percent. WTI oil for October delivery closed at $44.83 a barrel on the New York Mercantile Exchange, up $0.39 or 0.88 percent. That’s being reflected in a falling USA dollar, he said.
Gold futures for December delivery posted their longest rally since August 2, rising for a third straight session. Rates on two-year notes, which tend to be more sensitive to the monetary policy outlook, dropped six basis points to 0.73%.
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The U.S. Labor Day holiday kept volumes subdued on Monday, but new U.S. data releases and any speeches from Fed officials will be watched closely for clues to the timing of any rate moves. “The Saudi oil minister actually talked the market lower, which is going to cost his country billions”.
