In a speech late Thursday, Fed Chair Janet Yellen, who spoke a week after the Fed delayed a long-anticipated rate hike, said she and other Fed policymakers do not expect recent global economic and financial market developments to significantly affect the central bank’s policy.
But Yellen, in a speech in Massachusetts late Thursday (http://www.marketwatch.com/story/fed-chief-yellen-sets-the-stage-for-interest-rate-hike-2015-09-24), said growth internationally isn’t weak enough to have a long-term impact on USA monetary policy.
On Wednesday, gold prices for December delivery surged $22.30 or 2.0 percent, to settle at $1,153.80 an ounce, as investors opted for the safe haven appeal of the precious metal after global equity markets continued to decline on some disappointing economic data from the U.S. “Expectations are pretty low so companies should be able to meet and exceed their earnings expectations“.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, gained more than 0.4% on Friday to an intraday high of 96.88.
Gold also fell on Friday after a government report showed the US economy expanded more than previously forecast in the second quarter, helping rekindle rate concerns.
Despite the risks higher interest rates pose to mortgage costs, property stocks led the gainers in Hong Kong with the benchmark Hang Seng Index closing up 0.43 per cent at 21,186.32 points.
Nike (NKE) paced blue-chip gains, up 9 percent after reporting results that easily beat analysts’ estimates.
According to the Fed chair, it would “likely be appropriate to raise rates” from near zero “sometime later this year“, although she stressed the need to rely on data before taking any decision. This was revised up from the 3.7 percent growth that was reported last month. The company is expected to announce the appointment of a new CEO on Friday.
THE QUOTE: “A gradually increasing rate environment is a positive, because it sends a signal … that the U.S.is on a good, if not great, recovery to growth”, said Scott Keifer, global investment specialist at JPMorgan private bank. The dollar was up 0.37 percent against the yen at 120.55. China’s Shanghai Composite dropped 1.6 percent.
On the commodity markets, the November crude oil contract was up 79 cents at US$45.70 a barrel, sending the energy sector of the Toronto stock market higher, while the November contract for natural gas was down four cents at US$2.63.