Dollar, shares rally on Yellen speech, US GDP

Though the Fed didn’t raise rates this month, Heidi Richardson explains how to potentially prepare your bond portfolio for the rate regime change. The Fed has been reluctant to shake the boat in the wake of the financial crisis, fearing it could scare off investors and stun recent years’ positive growth of the U.S. economy. “The expectation of a rate increase still this year is based on model projections of growth and recovery in the economy, and individual committee members’ expectations”.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 0.72% at $1,145.50.

Gold fell from one-month highs on Friday after Federal Reserve Chair Janet Yellen kept the door open to a hike in interest rates later this year, sparking a rally in the dollar.

As it stands, USA economic prospects “generally appear solid”, she said.

EUROPE’S DAY: France’s CAC 40 jumped 3.7 percent, while Germany’s DAX climbed 3 percent.

MSCI’s all-country world index rose 1 percent despite a tepid performance in Asia, where some markets were in the red after data showed Japan slipping back into deflation. The S&P 500 added 13.02 points, or 0.67 percent, to 1,945.26 and the Nasdaq Composite gained 7.03 points, or 0.15 percent, to 4,741.50. The only two fallers on the FTSE 100 were Randgold Resources, down 22.5p to 3923.5p and Fresnillo off 2p at 619p.

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.

Google (GOOGL) fell more than 1% after the Federal Trade Commission began an investigation into complaints the search engine uses its Android operating system to promote its own services such as Google Maps, according to The New York Times. “As such, the dollar is likely to lack clear direction”, said Masafumi Yamamoto, senior strategist at Monex in Tokyo, who expects the pair to stick to a 118-122 yen range for a while.

METALS: Gold closed $8.20 lower at $1,145.60 an ounce.

Louis President James Bullard continued to press for USA central bank rate rises in a speech Friday, saying the economy’s current state no longer calls for rock bottom short-term interest rates.