Global equity markets traded slightly lower and the dollar edged higher ahead of the release of Federal Reserve minutes yesterday that should provide a clearer picture on when policymakers will raise US interest rates.
Oil prices fell more than one per cent after the Organisation of the Petroleum Exporting Countries reported its September output at eight-year highs, offsetting optimism over the group’s pledge to bring a global crude glut under control.
Sterling rebounded slightly from a brutal selloff since last week as British Prime Minister Theresa May’s offer to give UK lawmakers some scrutiny of the process behind plans to leave the European Union calmed fears of a “hard Brexit” involving a clean break from the single market.
US equity markets seesawed before the release of minutes of the Federal Open Market Committee’s latest meeting, while European markets and an index of global equity performance traded lower.
It’s a battle between faster growth and higher rates
“It’s a battle in the market between faster growth and higher rates. Markets are ‘OK’ with rates rising as long as they can see the growth starting to boost the top line,” said Brad McMillan, chief investment officer at Commonwealth Financial in Waltham, Massachusetts.
“It’s only when you see slower growth combined with higher rates that the market is really going to react,” he said.
The Dow Jones industrial average rose 20.34 points, or 0.11 per cent, to 18,149. The S&P 500 gained 3.07 points, or 0.14 per cent, to 2,139.8 and the Nasdaq Composite added 2.57 points, or 0.05 per cent, to 5,249.36.
In Europe, the FTSEurofirst 300 index of leading regional companies fell 0.37 percent to 1,337.16. MSCI’s all-country world equity index fell 0.39 per cent. The dollar index, which measures the greenback against a basket of six major trading currencies, hit a seven-month high at 98.018 ahead of the FOMC minutes.
Analysts said rising expectations that the US central bank will hike interested rates in December were boosting the dollar.
The euro hit an 11-week low of $1.1005 in early US trading, and was last down 0.43 per cent at $1.1006. The dollar was last up 0.85 percent against the yen at 104.38 yen.