New York Fed President William Dudley said strong employment and a long-awaited return of middle-wage jobs suggest the labor market is tightening and the broader US economy is on track, and earlier this week, he said it was “possible” for the central bank to hike rates at the September 20-21 meeting. Six of the 10 major SP 500 indexes were lower, with the interest rate sensitive utilities .splrcu falling the most by 0.66 percent.
Fed officials agree that more economic data is needed before raising interest rates, although they were generally upbeat about the U.S. economic outlook and labor market.
Advancing issues outnumbered declining ones on the NYSE by a 1.10-to-1 ratio; on Nasdaq, a 1.43-to-1 ratio favored decliners. Low rates have pushed up stock prices and any change might cool investor enthusiasm. Seoul’s Kospi added 0.9 percent to 2,017.94 and Sydney’s SP-ASX 200 advanced 0.4 percent to 5,497.40. India’s Sensex rose 0.6 percent to 28,166.50 and benchmarks in Taiwan, Thailand and Indonesia also gained. The Nasdaq Composite Index increased 9.11 points, or 0.17 per cent, to 5,237.77.
ANALYST’S TAKE: “There is clearly strong disagreement within the Fed with regards to the timing of further rate hikes”, said Angus Nicholson of IG in a report. Dudley, a permanent voting member and a close ally of Fed Chair Janet Yellen, said a rate hike as soon as September was possible given evidence of wage gains and a tighter labor market. Exports sank 14 per cent from a year earlier while imports plunged 25 per cent in a sign of persistent weak domestic demand.
“Some Japanese investors, commercial orders, are still interested in buying dollars on any move to 99 yen, so some short-term guys are not testing the downside today”, said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.
Shares of Target were down 6.4 percent while Lowe’s was down 5.6 percent after they cut full-year earnings forecasts.
LONDON, Aug 19 The dollar inched higher on Friday but was set for a more than 1 percent loss against all its major peers on the week, weighed down by investors’ lack of belief in the chances of a rise in US interest rates this year.
Weighing on sentiment were disappointing results from Target, down 6.1% as of 3.16pm in NY, as well as from Lowe’s, down 5.5%. Brent crude, used to price worldwide oils, lost 16 cents to $49.69 in London.
The dollar was up 0.3 per cent at 100.160 yen but still within sight of an 8-week low of 99.550 hit on Tuesday.
The euro EUR= slipped 0.2 percent to $1.1335 EUR=, but still within sight of its overnight high of $1.1366, its loftiest peak since June 24.