World shares mixed, dollar up as markets factor in Fed hike

In her first public statement since the USA election, Federal Reserve Chair Janet Yellen said Thursday that the central bank is close to raising rates as the economy continues to strengthen.

The yen continued to weaken in the wake of the Bank of Japan’s offer on Thursday to buy unlimited bonds.

Other high-yielding currencies also tumbled, with the Canadian, New Zealand and Australian dollars each off one per cent.

Among small-company stocks, mortgage lending service company LendingTree added $6.85, or 7.3 percent, to $100.05 and coal miner Cloud Peak Energy rose 80 cents, or 16.1 percent, to $5.80. Tyson Foods fell $3.14, or 4.5 percent, to $65.88 and Kraft Heinz gave up 78 cents to $81.62. Since builders wouldn’t undertake construction if there was no demand, analysts think the data reflects a real need for home-buying.

Finance Minister Taro Aso said that while nervous moves were seen in the forex market, the underlying moves were stabilising.

Even so, stronger economic growth and a recent uptick in inflation have bolstered the argument of Fed officials who have been pushing for a rate hike.

The euro, which is vulnerable to a slew of political risks, including an Italian constitutional referendum next month and French and German elections next year, hit an 11-month low of $1.0567.

A strong US dollar and concerns about capital outflows weighed on the local equity market this week. Yields have been on an uptrend since last week’s USA election, amid speculation that the Trump administration will embark on inflationary policies. Additionally, the US yield curve continues to steepen while the outlook for commodity prices (gold) continues to soften.

She also pledged to serve out her term as Fed chair through 2018. She said she could not imagine any circumstance that would cause her to leave early, addressing speculation that she might step down under Trump, given his critical comments of her during the election campaign.

Markets have for the past seven months anticipated an imminent interest rate increase but were disappointed as every consecutive Federal Reserve Open Market Committee (FOMC) failed to deliver a concrete date.

USA stocks rose Thursday as banks resumed their steep upward climb and retailers moved higher.

Shares in Taiwan closed slightly higher Friday after moving in consolidation mode amid lingering concerns over a possible interest rate hike by the U.S. Federal Reserve, which would lead to more foreign funds flowing out of the region, dealers said.

Investors continued to sell USA government bonds at a rapid clip, and bond prices wobbled and turned lower. The euro fell to 1.0599 from 1.0626 dollars. Benchmarks in Taiwan, Singapore and the Philippines rose while those in Thailand and Indonesia fell.

The 10-year US Treasury yield rose to 2.355 per cent, its highest since December.

The greenback hit a 5-1/2 month high against the yen of 110.92 before retreating to 110.64 yen, up 0.6 percent from Thursday. They later eased to close at just over 2 per cent.