The US dollar fell yesterday and gold continued to rise as markets priced the possibility that the Federal Reserve would not begin a tightening cycle this year, while US stocks opened little changed.
Speaking at the annual autumn meeting of the IMF and World Bank in Lima, Peru, on Sunday, Federal Reserve vice-chairman, Stanley Fischer, said policymakers are still likely to raise interest rates this year but that is “an expectation, not a commitment”, and could change if the global economy pushes the US economy further off course.
Crude oil futures fell nearly two per cent, after gaining almost nine per cent last week, while Brent also slipped but remained comfortably above $50 a barrel.
Oil has been on a roller-coaster ride over the last few weeks, recovering from six-year lows. North Sea Brent crude dropped to almost $42 a barrel in August, from a peak above $115 in June 2014, but then rallied back to an intraday high of $54.05 on Friday.
The US bond market was closed for the Columbus Day holiday.
US stocks were little changed in muted trading on Monday as investors paused before a busy week of quarterly results from US banks and other major industrial companies.
On Wall Street, major stock indexes were little changed but utility stocks, often traded in lieu of bonds due to their perceived lower risk and high dividends, outperformed with a 1.1 per cent advance on the S&P 500 utilities index.
The energy sector was the biggest decliner among the major S&P sectors as crude oil prices slipped. Chevron’s 1.2 per cent fall to $88.56 made it the biggest drag on the Dow Jones industrial average.
The Dow Jones industrial average rose 13.16 points, or 0.08 per cent, to 17,097.65, the S&P 500 lost 1.27 points, or 0.06 per cent, to 2,013.62 and the Nasdaq Composite added 1.17 points, or 0.02 per cent, to 4,831.64.
The pan-European FTSEurofirst 300 index and the euro zone’s blue-chip Euro STOXX 50 index both fell slightly after rallying last week. MSCI’s all-country world equity index was down 0.1 per cent.
Chinese stocks jumped over 3.0 per cent in heavy volume to end at their highest since August 21. China’s central bank took fresh steps to inject liquidity into the economy and said the stock market’s correction “is almost over”.
Japanese markets were closed for a holiday.
The US dollar index edged lower, trading near its lowest in almost a month.
The euro was up 0.1 per cent at $1.1368 and the yen 0.2 per cent stronger at 119.96 to the greenback.
China’s yuan firmed as far as 6.3175 to the dollar, its strongest since the August 11 devaluation.
Spot gold rose 0.4 per cent after gaining 1.6 per cent last week.
Copper rose following a more than 3.0 per cent gain last week after production cuts by Glencore boosted base metals, but analysts warned the shift in output may not be enough to offset weak demand growth in China.