Here are the top five things you need to know in financial markets on Monday, May 30:
1. Fed’s Bullard sees global markets “prepared” for summer rate hike
“My sense is that markets are well-prepared for a possible rate increase globally,” Federal Reserve (Fed) Bank of St. Louis president James Bullard said on Monday, though he preferred to reserve his opinion on the timing until the next meeting on June 15.
Bullard’s remarks came after Fed chair Janet Yellen indicated on Friday that a rate hike was likely appropriate “in the coming months”.
2. U.S. and U.K. markets closed, global stocks higher in light trade
Wall Street will remain closed on Monday due to the Memorial Day holiday after closing on Friday with the biggest weekly gains since March in the case of the EUR/USD, and since February in regard to the Nasdaq.
With U.K. markets also closed for a bank holiday, trading elsewhere was thin, but global stocks followed Friday’s gains in the U.S. and were broadly higher as investors shrugged off concern about rate hikes.
Asian shares registered gains on Monday with sentiment cautious in Chinese stocks and Australia, but Japan benefitted from the yen hitting a one-month low against the dollar.
European stocks markets hit one-month highs on Monday. At 9:56AM GMT, or 5:56AM ET, the European benchmark Euro Stoxx 50 rose 0.20%, the DAX gained 0.24% and the CAC 40 inched up 0.01%.
U.S. futures registered slight gains. The Dow Jones Industrial Average futures pointed to a 0.22% gain, S&P 500 futures rose 0.19%, while the Nasdaq 100 futures indicated a 0.17% advance.
3. Gold falls below $1,200 for first time since February
Gold futures fell sharply in European trade on Monday, dropping below the key $1,200-level for the first time since February as investors continued to factor in an increased chance of a near-term U.S. interest rate rise.
Gold for June delivery on the Comex division of the New York Mercantile Exchange sank to a session low of $1,199.00 a troy ounce, a level not seen since February 17.
The August contract last stood at $1,207.75 by 9:58AM GMT, or 5:58AM ET, down $8.95, or 0.74%.
4. Dollar rallies to 1-month highs vs. yen
After Yellen’s speech, rate hike bets pushed the dollar to a one-month high in trade against the yen.
The greenback has strengthened broadly in recent weeks as upbeat economic reports and comments by Fed officials suggested that the U.S. central bank could raise rates as soon as its June meeting.
Higher rates are positive for the dollar because they make the U.S. currency more attractive to yield-seeking investors.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.03% at 95.76, at 9:59AM GMT, or 5:59AM ET, trading near a two-month peak.
5. Oil continues downward trend ahead of OPEC meeting
Oil prices were modestly lower in quiet European trade on Monday, as a broadly stronger U.S. dollar prompted market players to lock in gains from a recent rally which took prices above the key $50-level.
Market players will be looking ahead to the Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna on Thursday. Most market analysts expect the oil cartel to keep their production quota unchanged amid rising prices.
U.S. crude oil futures dropped 0.39% to $49.14, at 9:59AM GMT, or 5:59AM ET, while Brent oil lost 0.70% to $49.60.