Increased optimism and continued growth of the United States’ economy lead the majority of Federal Reserve members to call for fresh interest rate hikes on Wednesday. U.S. stock indexes were lower after Federal Reserve Governor Randal Quarles said that “The U.S. economy appears to be performing very well and, certainly, is in the best shape that it has been in since the crisis and, by many metrics, since well before the crisis.”
Asian markets followed Wall Street lower, with the Nikkei 225 down 1.07 percent as of 2:25 p.m. HK/SIN and Hong Kong’s Hang Seng Index was down 0.96 percent after slumping 1.48 percent earlier in the session. The Shanghai Composite bucked the trend, soaring 1.92 percent higher.
Currency and Commodity Movements
On the currency markets, the dollar maintained its support against the euro, trading at $1.227, and it declined slightly against the yen, to trade at 107.42. The dollar index broke through the 90 level to trade at 90.09 .DXY. The greenback was strengthened by a rise in U.S. Treasury yields as 10-year notes hit four-year highs and two-year notes hit nine-year highs. 10-year debt yields were last trading at 2.94 percent, nearing the psychologically-important 3 percent level.
The steady dollar continued to put pressure on the commodities markets on Thursday. Brent crude futures were down 39 cents per barrel to $65.02, and U.S. WTI futures slid 52 cents per barrel, to trade at $61.16. On Wednesday, the American Petroleum Institute reported an unexpected decline in U.S. crude oil inventories for last week, a report that should have sent prices higher. Nevertheless, the stronger dollar outweighed this data by threatening demand as the stronger dollar makes oil more expensive.