US stock prices slipped yesterday after comments from Federal Reserve Chair Janet Yellen raised concerns about increased banking regulations, while oil prices rose in choppy trading amid hopes of an output agreement and data showing a bigger-than-expected increase in US gasoline inventories.
The dollar rose against the euro as European Central Bank President Mario Draghi said low interest rates are needed to revive growth and governments need to do their part if they want rates to eventually return to normal levels.
US and German government bond yields were little changed, underpinned by safe-haven demand as other markets were choppy. Gold prices fell to a one-week low on a stronger greenback.
Testifying at a House of Representatives Financial Services Committee hearing on Wednesday, Yellen said the Fed is “now considering making several changes to our stress testing methodology and process.”
For the eight US banks that are large and considered important to the global financial system the new buffer calculation “would result in a significant aggregate increase in capital requirements,” Yellen said.
The S&P financial index was down 0.4 per cent.
Deutsche Bank shares rebounded two per cent to 10.755 euro a share yesterday after Berlin denied it was working on a rescue of the bank, which boosted its balance sheet by selling its British insurance business.
Germany’s biggest lender faces big fines over claims it mis-sold mortgage-backed securities and, like other euro zone lenders, has been squeezed by the ECB’s negative rate policy. Its shares, which hit record lows on Tuesday, have fallen some 50 per cent this year.
The rise in Deutsche shares helped European stocks and provided early support to equities in other major markets.
In midday US trading, the Dow Jones industrial average was down 16.47 points, or 0.09 per cent, to 18,211.83, the S&P 500 was 3.74 points, or 0.17 per cent, lower at 2,156.19 and the Nasdaq Composite was down 11.56 points, or 0.22 per cent, to 5,294.15.
Europe’s broad FTSEurofirst 300 index was 0.69 per cent higher at 1,348.31.
The MSCI world equity index , which tracks shares in 45 nations, fell 0.74 points or 0.18 per cent, to 416.83.
Hopes for an output freeze deal had boosted crude prices but those gains evaporated at one point due to US data that showed a surprisingly large rise in gasoline inventories. They jumped back into positive territory after a Bloomberg report that said a Libyan official suggested an agreement is possible.