Global stocks down on Fed comments

22/03/2016 05:50 AST

Global equity markets slipped on Monday as the dollar moved higher and US Treasury yields rose on bullish inflation projections from two Federal Reserve officials.

Richmond Fed President Jeffrey Lacker said US inflation is likely to accelerate in coming years and move toward the Federal Reserve’s 2 per cent target while San Francisco Fed President John Williams told Market News International he would advocate for another interest rate hike as early as the April meeting.

The dollar rose 0.16 per cent to 95.234 against a basket of major currencies. The greenback had fallen for three straight weeks, a decline of 3.1 per cent.

The dollar fell last week when US Federal Reserve policymakers revised down the number of times they expect to raise interest rates this year to two from four.

Benchmark 10-year notes were last down 10/32 in price to yield 1.9067 per cent, up from 1.87 per cent on Friday. The stronger dollar weighed on European equities, with the pan-European FTSEurofirst stock index down 0.5 per cent at the start of a week shortened by the Easter break. US stocks also dipped slightly, with investors looking for fresh catalysts after a five-week rally that pushed the S&P 500 into positive territory for the year.

The Dow Jones industrial average fell 42.33 points, or 0.24 per cent, to 17,559.97, the S&P 500 lost 5.52 points, or 0.27 per cent, to 2,044.06 and the Nasdaq Composite dropped 8.80 points, or 0.18 per cent, to 4,786.84. MSCI’s index of world shares was 0.36 per cent lower. Crude oil prices were weaker, but off early lows, with Brent last down 0.1 per cent to $41.16 and WTI down 0.08 per cent at $39.47 a barrel as the market digested news of a modest rise in US drilling activity.

Uncertainty lingered, however, over the outcome of a meeting of the world’s major exporters next month to discuss freezing output.

Gold fell 0.78 per cent at $1,244.96 an ounce as the dollar advanced, its third straight decline, but the metal was underpinned by expectations that the ultra-low interest rate environment will persist on a global level.

The Gulf Today