Global Stocks Dip as Dollar Gains

Global stocks slid on August 19 as investors started to consider an increased chance of the Federal Reserve to raise interest rates. The US dollar also gained in value at the same time. In Europe, share markets suffered their largest weekly loss over two months. US stocks also dipped. This was due to declines in the utility shares as the investors considered the chance of a rise in the interest rates within the coming months.

Mixed bag

Prices of oil showed mixed results. The Brent crude ended lower. The WTO light crude, on the other hand, spiked by almost 25 percent in only two weeks. Analysts however gave a warning that this rally was a result of speculative activities. They said that fundamentals do not come into the picture at all.  Senior officials from the Federal Reserve have commented that the existing bias for raising the benchmark of US interest rates has resulted in the pushing of investors to re-examine in detail the minutes of last meeting of the American central bank. The last meeting was held in July. According to Carl Tannenbaum of Chicago headquartered Northern Trust, even as the minutes were opened to the public eye in July, the participants continue to analyze the contents and then update the expectations.

 

John Williams, the Fed chief of San Francisco, said on late August 18 that the Federal Reserve should return to its policy of monetary tightening as soon as in September. Investors are eager to hear a speech to be made by Janet Yellen, the Federal chairwoman in the city of Jackson Hole, Wyoming. The speech will provide clues when it comes to the monetary policy course. Terry Sandven of US Bank Wealth Management said that investors should pause at this stage as they search for more clarity spread over the subsequent few weeks.

Resilient and positive

Sandven, the chief strategist , at the wealth management firm, is of the opinion that performance until now has shown resilience and this kind of behavior can be expected to continue as one moves towards the latter half of 2016.  The S&P500, a US benchmark stock index went up by seven percent in 2016. Its recent record highs have been supported by the expectation that Federal Reserve will keep the rates low, along with posotive economic news and upbeat earnings.  The DJI or Dow Jones Industrial Average dropped 45.13 points or about 0.24 percent to touch 18,552.57.

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