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Category: Stockmarket / Currency / Futures / Markets / Money and Monetary Policy / US Elections

US markets fall on Trump, rate rise fears

Thursday, 3 Nov 2016 05:31:59 | Rebecca Hyam

The US presidential election and prospect of an interest rate hike are giving Wall Street traders plenty of headaches. (Jessica Rinaldi: Reuters)

The US Federal Reserve left interest rates on hold as was widely expected, but the prospect of a rate increase in December and a narrowing in the gap between presidential candidates, Hillary Clinton and Donald Trump, weighed on investor sentiment.

Markets at 7:30am (AEDT):

  • ASX SPI 200 futures -0.3pc to 5,168
  • AUD: 76.53 US cents, 62.27 British pence, 79.17 Japanese yen, 69 euro cents, $NZ1.0506
  • US: S&P 500 -0.65pc to 2,097, Dow Jones -0.43pc to 17,959, Nasdaq -0.93pc to 5,105
  • Europe: Euro Stoxx -1.4pc to 321, FTSE -1.04pc to 6,845 DAX -1.47pc to 10,370
  • Commodities: Gold +0.74pc to $US1,297.28/ounce, Brent crude oil -2.16pc to $US47.10/barrel, iron ore $US64.40/tonne

In a statement after its two-day meeting, the central bank said the economy had picked up momentum, job gains remained solid and inflation looked to be moving towards its 2 per cent target.

Westpac's senior market strategist Imre Speizer wrote in a note that the focus on inflation was particularly telling.

"The language on inflation has been firmed up, the statement noting that inflation and inflationary expectations have picked up," he wrote.

"The fed also dropped the language that it expects inflation to remain low in the near term before rising to 2 per cent, and just simply says they expect it to rise to 2 per cent.

"The near term policy guidance is nearly identical to the language used in September: 'The Committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives'.

"The only alteration here is the addition of 'continued'.

"In short, the Fed overall has a more balanced take on inflation and has slightly strengthened the language around the case for a hike."

European shares have posted their eighth straight day of declines, with the banking sector among the biggest losers in the overnight session.

The local share market is poised to fall again at the open, following steep losses yesterday, with the ASX SPI 200 down 0.3 per cent to 5,168.

The Australian dollar edged higher overnight and, at 7:30am (AEDT), it short time ago was buying 76.53 US cents.

West Texas crude oil had eased to $US45.27 per barrel, a barrel of Tapis was worth $US47.11 and spot gold had risen to $US1,297.28 an ounce.

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