Global markets show signs of steadying after volatile period

The current focus in markets is whether the Fed will raise interest rates at its meeting next week.

By: AP | London | Published:September 14, 2016 6:22 pm

Global stock markets stabilized Wednesday after a volatile few days when investors around the world fretted over the likelihood of an imminent rate hike from the US Federal Reserve.

KEEPING SCORE: In Europe, Germany’s DAX was up 0.4 per cent at 10,427 while the FTSE 100 index of leading British shares rose 0.6 per cent to 6,704. The CAC-40 in France was flat at 4,388. US stocks were poised for a solid opening, with Dow futures and the broader S&P 500 futures both up 0.2 per cent.

FED FACTOR: The current focus in markets is whether the Fed will raise interest rates at its meeting next week. Over the past few sessions, investors have weighed a series of speeches from Fed officials, some more hawkish than others _ many stock indexes have recorded their worst sessions in months. The growing consensus now in the markets is that the Fed will hold fire until December, which has helped calm the mood. Low rates over many years have boosted stock prices as investors put their money in assets given the low returns available in bonds.

ANALYST TAKE: “Markets are beginning to show signs of stabilization, following on from a surge in volatility,” said Joshua Mahony, market analyst at IG. “The heightened sensitivity to Fed rhetoric should cool as we enter a blackout period ahead of next week’s policy meeting.”

BAYER/MONSANTO: The big corporate development was the news that German drug and farm chemical maker Bayer AG says it has agreed to acquire seed and weed-killer company Monsanto in an all-cash deal valued at $66 billion. Bayer’s share price was up 3 per cent following the news. Monsanto shares have yet to begin trading.

ASIA’S DAY: Japan’s benchmark Nikkei 225 lost 0.7 per cent to close at 16,614.24. Hong Kong’s Hang Seng was down 0.1 per cent at 23,183.44. The Shanghai Composite fell 0.7 per cent to 3,002.85. India’s Sensex rose 0.04 per cent to 28,364.31. South Korean markets were closed for a national holiday.

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ENERGY: Following big falls on Tuesday stoked by a weak demand forecast from the International Energy Agency, oil prices steadied. Benchmark New York crude was down 6 cents at $44.83 a barrel while the international standard, Brent, fell 33 cents to $46.77 a barrel.

CURRENCIES: The euro rose 0.1 per cent to $1.1222 while the dollar rose 0.3 per cent to 102.82 yen.