US rate hike bets lift dollar, bond yields; stocks gain

NEW YORK - The dollar on Wednesday climbed to a one-month high against a basket of currencies, while financial stocks and Treasury yields rose after strong economic data helped boost expectations for a US Federal Reserve interest rate hike in December.

US small-cap stocks rallied on the expectation of lower taxes, tallying their biggest single-day gain since March.

President Donald Trump proposed the biggest U.S. tax overhaul in 3 decades, offering to cut taxes for most Americans but prompting criticism that the plan favors the rich and companies and could add trillions of dollars to the deficit.


“For the first time since we have had Trump and the administration in office, it looks like there is incrementally more of a possibility of tax reform going through that would actually be meaningful," said Thomas Martin, senior portfolio manager at GlobAlt Investments in Atlanta, Georgia.

Bets on another interest rate hike before the year ends firmed following Tuesday comments from Federal Reserve Chair Janet Yellen, who said the US central bank needed to continue gradual rate hikes despite broad uncertainty about the path of inflation.

Data showed new orders for key US-made capital goods increased more than expected in August, pointing to strength in the economy despite an anticipated drag to growth from massive hurricanes.

Perceived chances of a hike at the Fed's December meeting hovered around 80 percent on Wednesday from 72 percent on Monday, according to the CME Group's FedWatch tool.

The hawkish rate sentiment helped fuel S&P 500 financial shares, which gained 1.3 percent. The S&P 500 tech sector rose 1.1 percent, helped by an 8.5 percent surge in shares of Micron Technology after the chipmaker's better-than-expected quarterly earnings report.

On Wall Street, the Dow Jones Industrial Average rose 56.39 points, or 0.25 percent, to 22,340.71, the S&P 500 gained 10.2 points, or 0.41 percent, to 2,507.04 and the Nasdaq Composite added 73.10 points, or 1.15 percent, to 6,453.26.

“The renewed interest in technology coupled with the likelihood of higher interest rates spurring an interest in financials, then the news on tax reform progressing, are all positive catalysts" for U.S. equities, said Alan Lancz, president of investment advisory firm Alan B. Lancz & Associates Inc in Toledo, Ohio.

The Russell 2000 small-cap index rose 1.9 percent and hit a record high.

The pan-European FTSEurofirst 300 index rose 0.40 percent and MSCI's gauge of stocks across the globe gained 0.17 percent.

European banks rose 2 percent and hit their highest in 7 weeks.

DOLLAR RALLIES

The dollar index rose 0.5 percent, with the euro down 0.37 percent to $1.17470.

"It really is an extension of the rally kicked off by the Fed last week," said Mazen Issa, senior FX strategist at TD Securities in New York, referring to the Fed's meeting where it signaled it may raise rates for a third time this year.

Benchmark 10-year notes last fell 21/32 in price to yield 2.3032 percent, from 2.229 percent late on Tuesday.

Yields on the 2-year note rose to as high as 1.483 percent, the highest since November 2008.

Brent crude futures slipped from 26-month highs, while US crude rallied, after crude stockpiles in the world's top oil consumer unexpectedly drew down with refiners coming back online following Hurricane Harvey last month.

US crude rose 0.33 percent to $52.05 per barrel while Brent was last at $57.70, down 1.27 percent on the day.

Spot gold dropped 0.8 percent to $1,283.07 an ounce.

source: news.abs-cbn.com

Asian stocks tread water on US, commodities concerns

HONG KONG - Asian stocks are set for a third straight day of losses on Friday as a retreat in crude oil and other commodities prices knocked global sentiment, although receding concerns about France's presidential election kept the euro near six-month highs.

MSCI's broadest index of Asia-Pacific shares outside Japan opened flat on Friday. Japan and South Korea markets are closed for trading.

Commodity prices across the board tumbled, led by oil, which fell by 5 percent in overnight trading on concerns of a supply glut with analysts forecasting further losses.

"The rout in markets is unlikely to turn around quickly," ANZ strategists wrote in a daily note. "Oil markets face further potentially bearish data, with the US rig count likely to add to the bearishness."

Oil prices plunged to five-month lows on Thursday amid record trading volume in Brent crude, as OPEC and other producers appeared to rule out deeper supply cuts to reduce the world's persistent glut of crude.

Copper prices slid to four-month lows, following their biggest one-day drop in 20 months while Chinese iron ore futures tumbled 8 percent on Thursday on concerns that global commodity demand are set to fall sharply.

The weakness in commodities washed over to stocks, countering some fairly solid earnings reports and some cautious optimism about US President Donald Trump's reform plans after the US House of Representatives passed a healthcare overhaul.

Traders also remained cautious ahead of Friday's US government payrolls report, following March's underwhelming 98,000 figure. Economists on average expect 185,000 jobs were created in April.

Futures traders are pricing in a 79 percent chance of a June rate hike, up from 68 percent a week earlier, according to the CME Group's FedWatch Tool.

That hurt US Treasury notes with yields on benchmark 10-year notes yielding 2.36 percent, their highest since April 10, and up from 2.31 percent late on Wednesday.

The euro settled at a six-month high against the US dollar after centrist Emmanuel Macron consolidated his position to win France's presidential race against anti-EU candidate Marine Le Pen.

Beyond Sunday's vote, traders will be looking to the European Central Bank for clues on its plans to reduce its bond-buying programme.

Prospects of higher U.S. interest rates dampened demand for gold with the safe-haven asset changing hands at $1,228 per ounce.

source: news.abs-cbn.com

Asian stocks and dollar firmer as Yellen hints at March rate hike

TOKYO - Asian stocks rose early on Wednesday as Wall Street set record highs overnight after Federal Reserve Chair Janet Yellen spoke in support of an interest rate hike next month, while the dollar hovered near three-week highs.

Yellen said on Tuesday that the Fed will probably need to raise interest rates at an upcoming meeting in March, and that delaying rate increases could leave the Fed's policy-making committee behind the curve.

Yellen's comments boosted US bank stocks, helping push Wall Street indexes to record highs overnight.

The rise in US stocks nudged MSCI's broadest index of Asia-Pacific shares outside Japan to a 19-month high. The index was up 0.3 percent early on Wednesday.

"Fundamentally, the US banks are simply being used as a vehicle to express reflation and 'Trumponomics'," wrote Chris Weston, chief market strategist at IG in Melbourne.

"Although last night really belonged to Janet Yellen whose prepared comments that waiting too long to tighten would be 'unwise' and a further review its policy stance will take place at its upcoming meetings."

Japan's Nikkei added 1 percent and Australian stocks rose 0.9 percent.

In currencies, the dollar index against a basket of major currencies stood at 101.230, near a three-week high of 101.380 scaled overnight as investors reassessed the possibility of the Fed hiking interest three times this year following Yellen's comments.

US interest rate futures implied traders saw about a 41 percent chance of at least three rate increases in 2017, up from a 33 percent chance on Monday, CME Group's FedWatch program showed.

The greenback was a shade higher at 114.370 yen after gaining about 0.5 percent the previous day, when it rose to a two-week high of 114.500. The euro was steady at $1.0576 after slipping to a one-month trough of $1.0561 overnight.

The dollar was supported as US Treasury yields rose on the Fed Chair's comments, with the benchmark 10-year note yield climbing about four basis points to an 11-day high the previous day.

The stronger dollar, which puts non-US buyers of dollar-denominated commodities at a disadvantage, weighed on crude oil prices.

US crude was down 0.3 percent at $53.07 a barrel. Crude already came under pressure the previous day on evidence of surging US stockpiles.

Spot gold was little changed at $1,228.00 an ounce after paring its gains the previous day on a firmer dollar.

source: news.abs-cbn.com

Asian shares flat but on track for weekly gains

TOKYO - Asian shares flatlined on Friday but were on track for robust weekly gains, while the euro caught its breath after sliding when the European Central Bank trimmed the size of its asset purchase program and also extended it for longer than many had expected.

MSCI's broadest index of Asia-Pacific shares outside Japan wobbled close to the previous session's close in early trading, poised for a weekly gain of 2.2 percent.

Japan's Nikkei stock index was up 0.6 percent, up 2.4 percent for the week in which the dollar gained 0.6 percent against the yen.

The dollar was up 0.1 percent at 114.18 yen.

The euro was licking its wounds at $1.0615. It had been as high $1.0875 before collapsing when markets realized the ECB's actions were actually very dovish.

The ECB said it would reduce its monthly asset buys to 60 billion euros ($63.68 billion) as of April, from the current 80 billion euros, and extend purchases to December from March - three months longer than what some analysts had forecast.

That dragged down two-year yields across Europe and sharply steepened the yield curve, a gift for banks that typically borrow short maturities and lend long.

The promise of lower rates for longer was taken as a green light for carry trades, where investors borrow euros at cheap rates to invest in higher yielding currencies.

"This effective and extended easing may make euro a funding currency of choice and so puts euro-crosses in focus," Westpac analyst Tim Riddell said in a note.

ECB President Mario Draghi said the unexpected move was not an outright winding-down of the central bank's quantitative easing (QE) program, and the central bank reserved the right to increase the size of purchases again if the eurozone economy falters.

The ECB's bond purchase changes came less than a week before the Federal Reserve's policy meeting next Tuesday and Wednesday.

Interest rates futures, implied traders saw a 98 percent chance the US central bank would raise interest rates by a quarter point next week, and about a 50 percent chance it would raise rates by at least another quarter point by June 2017, according to CME Group's FedWatch program.

Despite the impending rate hike, major US stock indexes climbed again on Thursday and set fresh record highs as Wall Street continued its month-long rally following the election of Donald Trump to president.

"We're at a point in time between big announcements from a couple of the big central banks after the ECB, and looking forward to fed next week, so the current momentum underway seems to be the path of least resistance at this point in time," said Bill Northey, chief investment officer of the private client group at US Bank in Helena, Montana.

"We've come a long way, and I wouldn't expect us to keep same pace, but the trajectory might be correct" for dollar strength, he said.

The dollar index, which tracks the greenback against a basket of six major rival currencies, was steady on the day at 101.12, up 0.3 percent for the week.

Oil rebounded on growing optimism that non-OPEC producers might agree to cut output following a cartel agreement to limit production.

US crude added 0.3 percent to $51.01 a barrel.

source: news.abs-cbn.com

Asian stocks rise on back of Wall Street; gold slips

HONG KONG - Asian stocks opened higher on the back of a strong Wall Street with markets discounting the potential impact of Italy's referendum vote, while US Treasury yields firmed as robust economic data pointed to an interest rate hike next week.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent in early trade with Antiopodean markets leading gains. Korea climbed 1 percent in opening trades.

Wall Street rose on Monday, with the Dow Jones industrials setting fresh record highs following services sector data that showed further strength in the domestic economy.

US services sector activity hit a one-year high in November, with a surge in production boosting hiring, following on the heels of Friday's employment report that showed strong job gains last month.

The data pushed short-dated Treasury yields higher with two-year benchmark yields stabilizing near the 1.13 percent level, not far from a six-year high of 1.17 percent tested in late November as markets have baked in the probability of a rate increase by the US Federal Reserve next week.

Interest rates futures implied traders saw a 93 percent chance the Fed would raise rates by a quarter point to 0.50-0.75 percent next week, CME Group's FedWatch showed.

Oil fell with US crude down more than 1 percent at $51.26 per barrel as investors judged a 16 percent rally since the Organization of the Petroleum Exporting Countries' agreement last Wednesday to curb production was getting stale.

Still, higher stocks and firmer short-dated Treasury yields projected a more optimistic backdrop for risk appetite than Monday when Asian markets plunged as investors worried the euro-zone may be heading for a fresh crisis after the Italian vote.

That lift in sentiment pushed the prices of relative safe-haven assets such as gold and Japanese yen lower.

Spot gold fell by as much as 1.6 percent to its lowest since early February at $1,157 an ounce, before bouncing somewhat.

source: news.abs-cbn.com

Asia shares slip after Apple results hit Wall St, dollar off highs

TOKYO - Asian shares edged down on Thursday after disappointing earnings from technology giant Apple dragged on Wall Street, while the dollar remained shy of this week's nearly nine-month highs.

Besides Apple, results and forecasts from some other major US companies also weighed on US markets overnight. The S&P 500 and the Nasdaq Composite both skidded, though a standout performance by Boeing lifted the Dow Jones industrial average.

MSCI's broadest index of Asia-Pacific shares outside Japan as well as Tokyo's Nikkei stock index were both down 0.2 percent in early trading.

Expectations for a year-end rate hike by the Federal Reserve remained intact, and bolstered the greenback. In recent weeks, market participants have been pricing in more than a 70 percent chance that the US central bank would hike interest rates in December, according to CME Group's FedWatch program.

Later on Thursday, market participants will parse the latest data on US durable goods, jobless claims and pending home sales.

"These reports are not expected to have a dramatic impact on the dollar but with USD/JPY eyeing 105, stronger reports could give the pair the push that it needs to make a run for this key level," wrote Kathy Lien, managing director at BK Asset Management.

US growth figures scheduled for release on Friday could reinforce or temper Fed hike expectations.

The dollar added 0.1 percent to 104.61 yen, moving back toward this week's high of 104.87 yen touched on Tuesday, its highest level since late July.

The euro was steady at $1.0907, while the dollar index stood at 98.610, within sight of Tuesday's nearly nine-month high of 99.119.

Crude oil futures nursed losses after settling down more than 1 percent on Wednesday even after a surprise drawdown in US crude inventories, as traders remained cautious that OPEC would be able to cut production come late November.

US crude edged up 0.1 percent to $49.25 a barrel, while Brent crude was nearly flat at $49.99.

source: www.abs-cbnnews.com

Global markets: Dollar firms, US stocks steady before jobs data

NEW YORK - The US dollar gained on Thursday against a basket of currencies, hitting its highest level in more than two months and pressuring gold prices, as strong labor market data gave support to a possible US interest rate hike later this year.

The benchmark S&P 500 stock index ended barely higher while Treasury yields rose to three-week highs as investors positioned ahead of the closely watched US employment report due out on Friday.

In an encouraging sign for the labor market, data on Thursday showed the number of Americans filing for unemployment benefits unexpectedly fell last week to near a 43-year low.

Oil prices continued to climb, with US crude breaking through $50, spurred by an informal meeting among the world's biggest producers on output cuts and plunging US crude inventories.

The dollar rose to its highest against the yen in a month, and pinned sterling firmly to a three-decade low on worries about Britain's exit from the European Union. Against a basket of currencies, the greenback gained 0.6 percent.

Strong US jobs numbers could cement expectations of a Federal Reserve rate increase later this year and ripple through markets. Economists polled by Reuters forecast non-farm payrolls to increase by 175,000.

Traders were betting on a 64-percent chance the Fed will hike rates in December, up slightly from a day earlier, according to the CME FedWatch website.

"If you look at the economic data for the past month, pretty much across the board it's better and in some cases materially better than expectations," said Walter Todd, chief investment officer at Greenwood Capital Associates in Greenwood, South Carolina. "All of that would seem to push the Fed to move."

In the US equity market, the Dow Jones industrial average fell 12.53 points, or 0.07 percent, to 18,268.5, the S&P 500 gained 1.04 points, or 0.05 percent, to 2,160.77 and the Nasdaq Composite dropped 9.17 points, or 0.17 percent, to 5,306.85.

Gains in Apple, bolstered by optimism about the iPhone, countered a drag from Wal-Mart Stores, which tempered its profit expectations.

The pan-European STOXX index fell 0.4 percent. Shares of British budget airline easyJet tumbled after a weak profit report.

MSCI's gauge of stocks across the globe dipped 0.12 percent.

Europe's benchmark German bond yield edged briefly back above zero, reversing earlier falls, as a selloff in the British government bond market spilled over into the euro area.

Britain's 10-year gilt yield jumped nearly 10 basis points to a three-week high.

Benchmark 10-year US notes were last down 7/32 in price to yield 1.74 percent, up from nearly 1.72 percent late on Wednesday.

Oil rallied to fresh four-month highs.

Brent crude futures settled up 1.3 percent at $52.51 a barrel. US crude settled up 1.2 percent at $50.44 a barrel, eclipsing $50 for the first time since June.

"The fact that you've got crude look like it's willing to hold around that $50 level I think is a positive for the (stock) market," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. "That's maybe another confirmation giving a positive tone to future economic activity."

Spot gold dropped 1.1 percent and touched a four-month low, falling for an eighth straight session.

source: www.abs-cbnnews.com

Global markets: Wall Street gains; oil's rise fuels energy shares

NEW YORK - Major US stock indexes gained on Wednesday, boosted by financial shares amid encouraging economic data and by the energy sector as oil prices surged to June highs.

US Treasury yields also rose after data showed US services sector activity rebounded to an 11-month high in September, an encouraging sign for economic growth.

The Dow Jones industrial average rose 112.58 points, or 0.62 percent, to 18,281.03. The S&P 500 gained 9.24 points, or 0.43 percent, to 2,159.73 and the Nasdaq Composite added 26.36 points, or 0.5 percent, to 5,316.02.

"We're taking a little victory lap today after the surprisingly good economic data," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

US stocks had been pressured this week by concerns over Britain's exit from the European Union and expectations of a Federal Reserve interest rate increase in the coming months.

Chicago Fed President Charles Evans said he would be "fine" with raising US interest rates by year-end if U.S. economic data remained firm.

Traders see a 60-percent chance the Fed will hike at its December meeting, according to the CME FedWatch website. Financial shares, which tend to benefit in a rising rate environment, climbed 1.5 percent, while the energy sector gained 1.4 percent.

"People are certainly waiting for that inevitable interest rate rise by the Fed, but I think they're just not sure if that's a sign that things are better and earnings are likely to improve, or a reason for people to sell stocks because rates are rising," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

In Europe, bond yields jumped while the pan-European STOXX index fell 0.6 percent. Markets were rattled by the prospect of the region's central bank eventually winding down its bond-buying stimulus.

A Bloomberg article on Tuesday cited sources as saying the European Central Bank would probably wind down the monthly 80-billion euro ($90 billion) scheme gradually.

Italy's 10-year bond yield rose to 1.38 percent, its highest level since late June, according to Reuters data. Germany's 10-year Bund yield, the euro zone benchmark, rose more than 8 bps to hit zero for the first time in a fortnight .

"I am surprised at the reaction, but it's just this notion that the ECB may be discussing tapering one day that has upset the market," said ING rates strategist Benjamin Schroeder.

MSCI's gauge of stocks across the globe climbed 0.2 percent after two sessions of declines.

Oil prices rose to their highest since June after the fifth unexpected weekly drawdown in US crude inventories added to support on hopes that major producers will agree to cut output next month.

The US Energy Information Administration said crude stockpiles fell 3 million barrels last week, opposite of forecasts of analysts polled by Reuters for a build of 2.6 million barrels.

Benchmark Brent crude settled up 2 percent to $51.86 a barrel, while US West Texas Intermediate crude settled up 2.3 percent at $49.83 a barrel.

Benchmark US 10-year notes fell 11/32 in price to yield 1.72 percent, up from 1.68 percent late Tuesday.

The dollar was little changed against a basket of currencies as the encouraging services sector data offset a weaker-than-expected report on private-sector job growth.

Sterling rose 0.2 percent against the dollar, after dipping below $1.27 and hitting a three-decade low against the greenback during the session amid worries about Britain's EU exit.

source: www.abs-cbnnews.com

Threat of 'hard Brexit' pulls down Wall Street

NEW YORK - US stocks dropped on Tuesday as investors fretted about Britain's exit from the European Union and the prospect of a Federal Reserve interest rate hike in coming months.

It was the second straight session of losses on Wall Street, where investors were already on edge due to the uncertainty of a tight race ahead of the Nov. 8 presidential election.

Sterling slid to its lowest in more than three decades after British Prime Minister Theresa May said the country's divorce from the EU will not be "plain sailing" and that there would be "bumps in the road."

While the weaker pound sent UK stocks surging, it raised worries among US investors.

"Clearly there has been some reverberation from across the pond in terms of the prospect for a slightly more disorderly UK separation from the EU," said Bill Northey, chief investment officer for the private client group at US Bank in Helena, Montana.

Angst about future interest rate hikes also returned to the fore after Richmond Federal Reserve President Jeffrey Lacker said he would have voted in favor of an increase at the latest policy meeting had he been able to do so.

Traders have priced in a 63 percent chance of the Fed raising rates in December, according to the CME Group's FedWatch tool.

Meanwhile, the International Monetary Fund lowered its 2016 growth forecast for the US economy to 1.6 percent from 2.2 percent and painted a gloomy picture of the global economy.

Ten of the 11 major S&P 500 indexes fell, with the high dividend-paying utilities sector slumping 2.17 percent and telecom services down 1.67 percent.

The Dow Jones industrial average fell 0.47 percent to end at 18,168.45 and the S&P 500 lost 0.5 percent to 2,150.49.

The Nasdaq Composite dropped 0.21 percent to 5,289.66.

Investors' attention is turning to corporate profits, with third-quarter results rolling in over the next few weeks. A failure to meet already low expectations could put new pressure on an equities market already trading at valuations above historical averages.

S&P 500 companies on average are expected to post a 0.5 percent year-over-year dip in September-quarter earnings, the fifth straight quarter of declines, according to Thomson Reuters data.

In extended trade, Micron Technology was flat after the memory chipmaker reported fiscal fourth-quarter revenue above analysts' expectations.

During the session, Sears surged 6.42 percent after Bloomberg reported that the department store chain's Craftsman tool brand had attracted multiple bidders.

Declining issues outnumbered advancing ones on the NYSE by a 2.59-to-1 ratio; on Nasdaq, a 1.62-to-1 ratio favored decliners.

The S&P 500 posted 13 new 52-week highs and four new lows; the Nasdaq Composite recorded 82 new highs and 32 new lows.

About 7.2 billion shares changed hands on US exchanges, in line with the 7.1 billion daily average for the past 20 trading days, according to Thomson Reuters data.

source: www.abs-cbnnews.com

Global Markets: Shares rally, dollar sags on slow-motion Fed

SYDNEY - Asian shares look set to rise for a sixth straight session on Thursday after the Federal Reserve left U.S. rates unchanged and plotted a lower trajectory for future hikes, slugging the dollar and boosting commodity prices.

Traders expected stocks to at least match the 1.1 percent gain enjoyed by the S&P 500. MSCI's broadest index of Asia-Pacific shares outside Japan was seen testing its recent one-year peak.

While Tokyo was on holiday on Thursday, stocks were boosted on Wednesday by the Bank of Japan's shift to targetting a positive yield curve, a move that was considered bullish for banks, insurers and pension funds.

The U.S. Fed did highlight the risk of a hike in December, but the forward guidance on rates - known as the dot points - left investors feeling any tightening would be glacial at best.

Market pricing for a December move rose only a fraction to 59.3 percent, from 59.2 percent, according to CME Group's FedWatch program.

Richard Franulovich, an analyst at Westpac, noted that back in June the median dot showed five hikes to end-2017. Now it was down to just three. The estimate of the long run neutral rate had also fallen 12.5 basis points to 2.875 percent.

"We do not feel that the dollar has the wherewithal to make a more concerted run higher in the next few weeks," he added. "The FOMC is unlikely to deliver anything more than a very 'dovish' December hike."

The dollar was down at 100.40 yen, having lost 1.3 percent on Wednesday to touch a 3-1/2 week low of 100.30. The euro had popped up to $1.1190, while the dollar index stood at 95.499 after easing 0.5 percent from a more than six-week high of 96.333.

CENTRAL BANKS STILL TRYING

The yen had gained broadly after the BOJ's shift to yield curve control - already abbreviated by the market to "YCC" - left some unimpressed.

"Fundamentally, it did not amount to an easing of monetary policy, but merely offers policy tweaks at the margin and a strengthening of forward guidance," said Frederic Neumann, co-head of economic research at HSBC.

"The BOJ now essentially promises to purchase JGBs for even longer, until inflation exceeds, and not merely meets, its 2 percent inflation target."

Another central bank struggling with too-low inflation is the Reserve Bank of New Zealand and it renewed a pledge to lower rates again on Thursday even as much of the domestic economy is growing briskly.

The RBNZ's blunt statement that further easing would be needed knocked the local dollar down half a US cent to $0.734, but the market has found it hard to sell a currency that still offers an overnight interest rate of 2 percent.

In commodity markets, gold traded at $1,332.36 an ounce, having climbed 1.6 percent as the US dollar declined.

Oil prices had climbed as much as 3 percent on Wednesday after a third surprise weekly drop in US crude stockpiles boosted the demand outlook in the world's largest oil consumer.

Another supportive factor was an oil workers' strike in Norway, which threatened to cut North Sea crude output.

U.S. crude (WTI) futures were up another 29 cents early Thursday at $45.63 a barrel. Brent crude futures had finished $1.17 higher at $47.05 per barrel.

source: www.abs-cbnnews.com

Stocks, gold fall as Fed hike back on the cards

HONG KONG - Asian stocks fell and the US dollar stood tall on Thursday as markets scrambled to factor in the possibility of another interest rate increase by the Federal Reserve as early as June. Gold stumbled.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8 percent in early trade as the prospect of a second U.S. rate hike in six months raised concerns for emerging markets already grappling with a slowing China.

South Korea and Australia led regional markets lower with 0.5 and 0.6 percent falls each as investors refocused their attention on the growing differences between the health of the world's biggest economy and its global counterparts.

"In the short term, emerging markets are the most vulnerable," Steven Englander, global head of G10 FX strategy at Citibank wrote in a note to clients.

"Overall, the divergence trade is revived until further notice," he wrote in a note to clients, saying the Canadian dollar and the Aussie were vulnerable due to concerns around those economies.

Japan's Nikkei rose early thanks to a weaker yen, which fell to a three-week low against the dollar after minutes of the last Fed meeting suggested a rate increase is firmly on the table at its policy review next month. But the Nikkei later pared its gains to just 0.2 percent.

The Fed minutes noted Fed officials said it would be appropriate to raise interest rates in June if economic data points to stronger second-quarter growth as well as firming inflation and employment.

Such views helped revive the prospect of a rate hike in June, which had been dismissed by many investors.

CME fed fund futures showed that the probability of a June rate increase by the Fed rose to 34 percent after the release of the FOMC minutes on Wednesday from 19 percent earlier in the day, 15 percent on Tuesday, and less than 1.0 percent a month ago, according to CME group's FedWatch.

Still, many in the market are still sceptical the Fed would raise rates ahead of Britain's June 23 referendum on whether to remain in the European Union, a risk that was pointed out by some Fed policymakers. July may be a stronger possibility.

The dollar index hovered just below a seven-week high of 95.27 scaled overnight, boosted by sharply higher U.S. Treasury yields.

The benchmark 10-year Treasury note yield jumped more than 10 basis points on Wednesday while the yield curve steepened slightly, breaking a multi-month streak of flattening.

The greenback was steady at a three-week high of 110.25 against the yen hit overnight. The euro was pinned down near $1.1214 , its lowest since late March.

"With April activity indicators consistent with a healthy bounce-back in growth, we see risks of two rate hikes in 2016, with the first coming in the June/July time horizon," strategists at Barclays said.

Fed Vice Chairs William Dudley and Stanley Fischer are due to speak later in the day and the markets will be eager to get more details on the Fed's thinking.

Gold took the renewed expectations of a U.S. rate hike on the chin. Prices for the precious metal are inversely correlated to monetary policy easing, fell 0.1 percent to a three-week low $1256 per ounce.

The stronger dollar also weighed on commodities such as oil, which saw U.S. crude futures lose 0.4 percent to $48.00 a barrel. A stronger dollar tends to put non-U.S. buyers of greenback-denominated commodities at a disadvantage.

Three-month copper on the London Metal Exchange fell to as low as $4563.50 overnight, the weakest since Feb. 19 and was hovering near those levels.

source: www.abs-cbnnews.com