Yellen affirms interest rate hike likely

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.

Gap (GPS.N) fell 6.5 percent to $28.70 in premarket trading after the apparel chain said it expected a further drop in traffic during the crucial holiday shopping season.

Overseas, the Bank of Japan offered to buy unlimited bonds for the first time under a revamped policy framework as domestic debt yields surged in the wake of Trump’s election victory.

Neil Wilson, market analyst at ETX Capital, said “the fact is a December rate hike has already been priced in – markets think there is a roughly 90% chance the Fed will increase the target federal funds rate”. Consumer companies are also rising, but companies that make and sell food and household goods are lagging the market after Wal-Mart and Smucker announced disappointing sales.

Gold is highly sensitive to interest rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. “The Trump rally can continue, unless some cautious comments come out from the US side”.

The spot silver price was recently at an unchanged $16.605/16.640 per oz.

“Yellen’s comments made many investors wary of an immediate rate hike, and investors at home and in the region were afraid that foreign investors will move more funds out of the region and into USA dollar denominated assets”, KGI Securities analyst Phil Chu said.

In China, bullion of 99.99 percent purity declined 1 percent to 270.70 yuan a gram ($1,222 an ounce) on the Shanghai Gold Exchange. The Standard & Poor’s 500 index rose 10 points, or 0.5 percent, to 2,186. “The unemployment rate, which stood at 4.9 percent in October, has held relatively steady since the beginning of the year”. The stock skidded $1.38, or 4 percent, to $31.42.

US stocks, which rallied after Republican Donald Trump’s surprise White House win on the potential for economic stimulus, edged up, led by a 1.3 percent gain in financials, which benefit from higher rates. Appreciating dollar also pulled down a host of global currencies including euro and Japanese yen. Tesoro shares rose $3.23, or 3.8 percent, to $88.97. Prices have dropped nearly 20 percent from a closing high set in early August, the common definition of a bear market. It was up 2.2 per cent for the week.

KEEPING SCORE: Japan’s benchmark Nikkei 225 index added 0.8 percent to 18,011.79 as the yen hit a six-month low, helping shares of the country’s big exporters.

The FTSE 100 index of leading British shares added 0.7 percent and the CAC 40 in France rose 0.6 percent. The rate has remained in a range of 0.25 percent to 0.5 percent for the entire year.