For some reason, financial markets seem to be wandering towards a major inflection point centred on the price of Apple shares and the timing of the first US interest rate rise since 2006.
While the latter is a known factor (for good or bad), the former has emerged in the past couple of days as concerns about the health of the Chinese economy translate into concerns about Apple sales in that market – its most important for future growth.
The timing of the interest rate rise was even more firmly pinned to September 17 and the end of the two day Fed meeting that day by a senior Fed Governor, Dennis Lockhart.
As a result, the Dow fell 0.27% to end at 17,550.69, the S&P 500 lost 0.22% to 2,093.32, while the Nasdaq Composite dropped 0.2% to finish at 5,105.55.
The US dollar rose as a result, rising off two month lows that had earlier helped commodity prices to steady after the sell-off of the past few days.
But the higher dollar forced gold prices a couple of dollars an ounce lower in New York, and oil prices trimmed their gains in after hours trading. Brent regained the $US50 a barrel level in London for a 60 cent rise on the day. Copper prices edged up 0.3% in London and New York, but the gains were not convincing.
Spot iron ore prices in China fell 0.6% to $US55.29 per tonne overnight.
The Aussie dollar retreated from over 74 US cents to trade around 73.70 in early Asian trading today.
And the local market will start with a loss of around 16 points on the ASX 200 futures market, a weaker start to yesterday when local investors resisted the weakness from offshore and pushed the ASX 18 points higher.
That however was half the earlier gains after the market took fright at the ‘positive’ comments about the value of the Aussie dollar in the past meeting statement from Reserve bank Governor, Glenn Stevens.
Investors also reacted to the more relaxed attitude to the economy evident in the statement. But comments from Dennis Lockhart have changed that attitude to the currency and the greenback moved back to centre stage.
Lockhart told the Wall Street Journal that September may be the right time for Fed to lift interest rates.
“The economy is in a state of readiness for beginning normalisation,” Mr Lockhart was quoted as telling the Journal.
The iPhone maker’s shares fell 3.2% to $US114.64, a new six month low as the slowdown in China and worries over demand for iPhones were pressuring Apple’s shares.
