Yellen: Too early to determine impact of global developments

The main development has been how the markets have reacted to Fed Chair Janet Yellen testimony to Congress – her message being rate rises may be delayed but not abandoned, but her dovish tone showed the Fed was concerned about the global markets.

“Some of the greatest values are in these beaten-down names, but the sentiment is still so negative”, said Kent Engelke, chief economic strategist at Capitol Securities Management Inc.

Amid the volatility, investors are looking for havens for their cash, with government bonds and precious metals in demand.

One reason to push rates into negative territory – in other words, to force banks to pay to park a portion of their reserves at the central bank – would give these banks an incentive to instead lend the funds, thus spurring economic growth.

USA bank stocks, like their European peers, took a severe beating.

The Dow Jones industrial average began the day at 15,758 points, or about 0.98 percent decrease from Wednesday’s close. The average had been down as much as 411 points. They said that these rates could be the default reference rates for markets. “She had the opportunity to do that, so that’s obviously feeding into market anxiety”.

The stock was the biggest drag on the Dow, responsible for 68 points of the index’s 310 point decline. The financial sector, already the worst performing S&P sector this year, dropped 2.71 percent.

At 1030 GMT, Britain auctions 1.5 billion pounds ($2.17 billion) of the benchmark 30-year gilt.

On Thursday, the dollar was down a further 1.7 percent at 111.42 yen. Energy stocks slumped 1.9 percent as oil prices continued to decline. Bucking the trend is Randgold Resources (LON:RRS), whose shares are tracking the gold price higher.

Tesla Motors climbed 4.7 percent after the electric vehicle maker said its lower-priced Model 3 sedan is on schedule for 2017 release. It added $8.39 to $47.96.

Shares in Societe Generale are being hit hard after the French bank warned it would not achieve a targeted increase in profitability this year. Britain’s FTSE 100 shed 2.4 percent. Emerging market currencies are mixed, the rupiah and ringgit are stronger, while the rest are fairly flat.

Most economists agree low prices at the pump are also enormously beneficial to American households, which tend to use cash not spent on gasoline to save more or pay down debt. China and Taiwan will reopen on Monday. In Asia, markets shut in Japan and China, however, shares fell crosswise over leaving Australia an exception. The 10-year Treasury yield plummeted to 1.53% on Thursday, its lowest level since August 2012.

United States futures plunged on Thursday on continuing concerns about a global sell-off and as investors jumped to the safety of gold.

Stocks and oil may be getting the most attention in global markets, but there are big moves elsewhere, too – notably the Japanese yen. It also fell against the euro, which was up to $1.1330 from $1.1277.