LONDON: US stocks pushed higher and shorter-term Treasuries pared early losses after the minutes of the Federal Reserve’s September policy meeting played to expectations that US interest rates would not be raised this year.
At the close of trade in New York, the S&P 500 equity index was up 0.9 per cent at 2,013, its first break above the 2,000 level for three weeks. The CBOE Vix equity “fear gauge” was down 4.1 per cent in late trade at 17.64, well below its long-term average of 20.
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The yield on the two-year Treasury note, which moves inversely to its price, was up 1 basis point at 0.64 per cent, having been 2bp higher before the minutes’ release. The 10-year yield, however, was up 5bp at 2.11 per cent.
But a post-minutes sell-off for the dollar evaporated and gold quickly shed an initial advance to stand $4 lower at $1,141 an ounce.
“The latest FOMC minutes clearly signal that overseas factors are an increasingly important driver of monetary policy, mirroring the press conference from Fed chair Janet Yellen,” said Nick Stamenkovic, macro strategist at RIS Capital Markets
“As a result, the hurdle for a rate hike before year-end has increased, particularly after September’s employment report.”
Earlier, global markets had struggled to establish a clear trend as participants attempted to thread together a cohesive narrative from divergent themes including cautious comments from the UK and eurozone central banks, higher oil prices and another batch of weak economic data out of Germany and Japan.
Adding to the mix were reports of fresh takeover activity, gains for Chinese stocks as markets reopened after the Golden Week holiday, and some bad news from European banks, made all the more worrying given the proximity of the US earnings season.
On Wall Street, shares in EMC rose after reports that computer maker Dell was in talks to buy the data storage group. The energy sector was higher as Brent crude rallied 3.4 per cent to settle at $53.05 a barrel, the highest since the end of August, and US West Texas Intermediate briefly topped $50.
