Revelation 6:5,6 NCV When the Lamb opened the third seal, I heard the third living creature say, "Come!" I looked, and there before me was a black horse, and its rider held a pair of scales in his hand. Then I heard something that sounded like a voice coming from the middle of the four living creatures. The voice said, "A quart of wheat for a day's pay, and three quarts of barley for a day's pay, and do not damage the olive oil and wine!"
Photo courtesy of Reuters/Brendan McDermid
NEW YORK (Reuters) – Stock markets around the world fell and bond yields rose as investors weighed the implications that a U.S. interest rate rise before the end of the year would have for the global economy and markets.
The Federal Reserve, which kept its rates on hold as expected on Wednesday, took the unusual step of strengthening its language about timing in its statement, making it clear that a December rate hike was still possible. The Fed also removed a previous warning about slowing global growth.
Wall Street was lower, giving up some of Wednesday’s gains. The U.S. stock market initially reacted negatively to the Fed statement, but later reversed course to end near the day’s highs on Wednesday.
The MSCI All-Country World Index <.MIWD00000PUS> has recovered most of the losses that occurred beginning in mid-August on worries about slowed worldwide demand and the Fed’s plans. It was last down 0.6 percent on Thursday.
U.S. Treasury yields continued Wednesday’s rise after the Fed explicitly referred in its statement at the end of its two-day policy meeting to conditions necessary “to raise the target range at its next meeting”. Reference to a particular meeting is rare for the Fed.
The benchmark 10-year Treasury yield rose 7 basis points to 2.16 percent <US10YT=RR>. The two-year note’s yield was 0.73 percent, highest since late September.
The Dow Jones industrial average <.DJI> fell 32.98 points, or 0.19 percent, to 17,746.54, the S&P 500 <.SPX> lost 1.42 points, or 0.07 percent, to 2,088.93 and the Nasdaq Composite <.IXIC> dropped 12.32 points, or 0.24 percent, to 5,083.38.
The first estimate of third quarter U.S. growth, released on Thursday, showed the world’s biggest economy expanded at a 1.5 percent annualized pace, below the expected 1.6 percent. But economists expect growth to pick up in the fourth quarter, given strong consumer spending figures.
In Europe the pan-European FTSEurofirst 300 index <.FTEU3> was down 0.2 percent at 1,481 points. Earlier in Asia, Japan’s Nikkei share average <.N225> gained 0.2 percent to close at 18,935.71.
Many investors are still not convinced about a rate lift-off given a recent run of soft U.S. data, making economic releases in coming weeks more crucial in determining a December move.
Economists expect a key U.S. manufacturing index due Monday <USPMI=ECI> to show the first contraction in the sector in 2-1/2 years, which would not be conducive for a rate hike.
The Fed’s stance contrasts to the European Central Bank and other major central banks, a factor that is expected to underpin the dollar. The Fed and ECB hold policy decisions within two weeks of each other in December.
The ECB last week signaled its readiness to inject more stimulus to boost prices and the People’s Bank of China followed with its sixth interest rate cut in less than a year.
The dollar gave back its earlier gains, with the euro trading 0.4 percent higher on the day at $1.0966 <EUR=>, having skidded to a 2-1/2 month low of $1.0826 overnight.
Crude oil futures were slightly higher one day after soaring more than 6 percent as the U.S. government reported an inventory build.
U.S. crude <CLc1> rose 0.4 percent to $46.11 a barrel. Brent <LCOc1> was steady at $49.05. Spot gold <XAU=> fell 2 percent to $1,150 an ounce.
(By David Gaffen; Additional reporting by Anirban Nag; Editing by Gareth Jones and Nick Zieminski)
