Cyber Monday Deal: Up to 60% off InvestingProCLAIM SALE

GLOBAL MARKETS-Equities set 2-week low before Yellen speech, dollar dips

Published 2016-08-26, 06:58 a/m
© Reuters.  GLOBAL MARKETS-Equities set 2-week low before Yellen speech, dollar dips
XAU/USD
-
JP225
-
BNPP
-
DX
-
GC
-
STOXX
-
MSCIEF
-
MIAPJ0000PUS
-
MIWD00000PUS
-
DXY
-

* MSCI All-Country World index hits lowest since Aug. 9

* Dollar index edges down

* Yellen may seek middle ground in rates debate -analysts

By Atul Prakash

LONDON, Aug 26 (Reuters) - Global shares slipped to a two-week low and the dollar edged down on Friday as investors turned cautious before a keynote speech by Federal Reserve Chair Janet Yellen that could map out a clearer path for U.S. interest rates.

The MSCI All-Country World index .MIWD00000PUS was down 0.1 percent by 1041 GMT, after slipping to its lowest level since Aug. 9 earlier in the session. The pan-European STOXX 600 index .STOXX also fell 0.1 percent.

Investors were wary of Yellen hinting at a near-term interest rate hike, which could divert some of the liquidity that has underpinned riskier assets worldwide, though others predicted she would strike a more equivocal note.

The dollar index .DXY , which tracks the currency against six major peers, slipped 0.11 percent to 94.675, while euro zone government bond yields crept up.

Recent hawkish comments from other Fed officials have raised expectations of a U.S. rate hike this year, though markets are not fully pricing one in till 2017.

"Markets are a bit worried about the upcoming comments from Yellen, which is understandable given how much of the market strength is due to central bank action," said Philippe Gijsels, head of research at BNP Paribas (PA:BNPP) Fortis in Brussels.

"The fact that some of her disciples have indicated that it may be time to raise rates again has not done much in terms of calming sentiment. She will probably try to strike a balance between an improving U.S. economy and risks abroad."

Chris Scicluna, head of economic research at Daiwa Capital Markets, took a similar line, saying: "Yellen won't be able to ignore the current debate but she can't make a commitment either because there's a range of views on the FOMC."

On Thursday San Francisco Fed President John Williams and Kansas City Fed President Esther George defended the need to raise rates, albeit gradually, to keep the U.S. economy from overheating. equities were set for their first weekly loss in seven. The benchmark emerging market stocks index .MSCIEF edged up 0.1 percent in wafer-thin trading, but was on course to end the week down 1.2 percent and in the red for the first time since the start of July. in Asia, Japan's Nikkei index .N225 fell 1.2 percent after U.S. stocks closed modestly lower on Thursday. However, MSCI's broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS were flat.

On the commodities front, oil prices fell and was set for its largest weekly decline in a month after the Saudi energy minister tempered expectations of strong market intervention by producers during talks next month, and as analysts pointed to a supply overhang. O/R

Zinc prices CMZN3 touched their highest level in 15 months as fresh shutdowns in China's steel sector added to mine supply concerns. As China steel mills shutter, steel prices lift, meaning the remaining mills can pay more for ingredients such as zinc. MET/L

Wariness ahead of Yellen's speech also gave spot gold XAU= a leg-up. It rose 0.3 percent, narrowing this week's losses.

For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.