US indices fall after Fed minutes | IFCM
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US indices fall after Fed minutes - 22.2.2018

Dollar higher after Fed minutes

US stock indices dropped further on Wednesday after Fed minutes failed to dispel fears of more aggressive Fed tightening spurred by rising wage and price data lately. The S&P 500 lost 0.6% to 2701.33 erasing earlier gains of more than 1%. The Dow Jones industrial fell 0.7% to 24797.78. Nasdaq composite index slipped 0.2% to 7218.33. The dollar strengthening persisted: the live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, rose 0.5% to 90.135. Futures on main US stock indices point to lower openings today.

Fed minutes showed the central bank won’t delay in raising interest rates further as officials saw a stronger economy than at the end of 2017 and “increased likelihood” of more rate hikes. Treasury yields continued to rise after the release of Federal Reserve minutes and the US dollar strengthened. Ahead of Fed minutes Dallas Fed President Rob Kaplan, who is not a voting member of the Fed’s interest rate committee this year, said the US central bank should continue to raise short-term interest rate targets “gradually and patiently”. Minneapolis Fed President Neel Kashkari said he has “hope” that inflation is picking up, and that the US central bank “can’t make policy based on market blips, up and down.” Economic news were mixed: the Manufacturing PMI which tracks US manufacturers rose to a nearly 3½-year high in February as the Services PMI hit a six-month peak, according to Markit. Separately, existing home sales fell 3.2% in January.

Nasdaq

Weaker euro supports European stocks

European stocks extended gains on Wednesday as the euro and the British Pound continued the slide against the dollar. The Stoxx Europe 600 closed 0.2% higher. Germany’s DAX 30 slipped 0.1% settling at 12470.49 on data German manufacturing activity was at six month low. France’s CAC 40 rose 0.2% and UK’s FTSE 100 advanced 0.5% to 7281.57. Indices opened 0.5%-0.7% lower today.

German stock index wasn’t helped by Markit report the Manufacturing PMI declined to 60.3 in February from 61.1, with Composite PMI slipping to 57.4 from 59. Manufacturing and services data from France also underperformed, with manufacturing and services activity slowing in euro-zone generally.

Asian markets mixed

Asian stock indices are mixed today after Wall Street retreat following Fed minutes release. Nikkei ended 1.2% lower at 21712 as yen gained against the dollar. Mainland China’s stocks are higher catching up in the first day of trading after the weeklong Lunar New Year holiday: the Shanghai Composite Index is 2.2% higher while Hong Kong’s Hang Seng Index is down 1.2%. Australia’s All Ordinaries Index added 0.1% with Australian dollar steady against the greenback.

Brent extends losses despite expected US inventory draw

Brent futures prices are falling today as dollar strengthens despite a forecast US crude stocks fell unexpectedly last week. The American Petroleum Institute forecast late Wednesday US crude oil inventories fell by 907,000 barrels to 420.3 million barrels last week. Prices inched higher yesterday: April Brent crude rose 0.3% to $65.42 a barrel on Wednesday. Today at 16:30 CET the Energy Information Administration will release US Crude Oil Inventories.

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