World shares mixed, dollar up as markets factor in Fed hike
HONG KONG (AP) - World stock indexes were mixed while the dollar rallied Friday as investors hunkered down for a likely U.S. rate hike next month after Fed chief Janet Yellen signaled the move would come soon.
KEEPING SCORE: European shares were uneven in early trading. France's CAC 40 edged up 0.1 percent to 4,533.33 and Germany's DAX added 0.2 percent to 10,705.58. Britain's FTSE 100 lost 0.2 percent to 6,783.17. U.S. shares were poised to open lower. Dow futures dipped less than 0.1 percent to 18,861.00 and broader S&P 500 futures slipped 0.1 percent to 2,182.60.
RATE HORIZON: In remarks to Congress, Yellen suggested the U.S. central bank is on track to raise interest rates when policymakers hold their final meeting of the year in December. She said the improving U.S. economy has bolstered the case for raising rates, in comments that increased certainty for investors. The Fed raised its key interest rate in December 2015 but it's still at ultralow levels that have fueled a multiyear global stock market boom. Economists forecast rates will go up by a quarter-point in December followed by two more hikes in 2017. Markets are now looking ahead to data due next week that will give them more insight into the state of the global economy, including manufacturing and service indexes for Europe and the U.S. and a factory measure for Japan.
MARKET INSIGHT: "There's still a degree of nervousness here but it's mainly in relation to what Donald Trump will do as opposed to what the Fed will do," said Shane Oliver, head of investment strategy at AMP Capital in Sydney, referring to the U.S. president-elect's big promises to cut red tape and business taxes and increase government infrastructure spending without providing specifics. "Investors around the world are coming around to the view that the Fed will raise rates in December."
ASIA'S DAY: Japan's benchmark Nikkei 225 index added 0.6 percent to finish at 17,967.41 as the yen hit a six-month low, helping shares of the country's big exporters. South Korea's Kospi shed 0.3 percent to 1,974.58 while Hong Kong's Hang Seng rose 0.4 percent to 22,344.21. The Shanghai Composite slipped 0.5 percent to 3,192.86 while Australia's S&P/ASX 200 climbed 0.4 percent to 5,359.40. Benchmarks in Taiwan, Singapore and the Philippines rose while those in Thailand and Indonesia fell.
CURRENCIES: The dollar rallied on the prospect of higher U.S. interest rates. It climbed to 110.75 yen - its highest level since the end of May - from 110.17 yen in late trading Thursday. The euro fell to its lowest in nearly a year, sinking to $1.0592 from $1.0614.
ENERGY: Oil extended its decline. Benchmark U.S. crude futures slid 70 cents to $44.72 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 15 cents to settle at $45.42 a barrel on Thursday. Brent crude, which is used to price international oils, slipped 62 cents to $45.87 a barrel in London.