Red ink everywhere in the US and European markets (with the exception of London) after Fed chair, Janet Yellen all but confirmed the US would get a rate rise later this month for the first time since 2006.
Shares, oil, gold, copper and other commodities fell, some sharply, as the US dollar hit a 2015 high against a basket of major currencies. The Aussie dollar eased, but remained above 73 US cents just after 7 am this morning in early Asian trading.
Spot iron ore prices fell again overnight to new lows since the current pricing system started back in 2010. The price fell 2.6% to $US41.13 a tonne, a fall that will rattle local investors today.
The local market will but hit hard this morning as reality strikes about the looming US rate rise – the ASX futures market was showing a near 50 point loss for the opening later this morning.
Losses will be seen across the rest of Asia as well – that’s despite a solid 2.3% rise for the Shanghai market yesterday.
The Dow fell 0.89%, the Nasdaq, 0.65% and the S&P 500 lost 1.08% as investors confronted the growing reality of the looming rate rise.
Comments she made in a speech in the US overnight made it pretty clear the Fed chair will support the central bank’s first interest-rate increase in nine years when policy makers meet in two weeks.
She told a Washington audience that she expects the economy to continue to grow over the forecast horizon, adding more jobs and bringing inflation back up toward the central bank’s 2% annual target.
She is expected to repeat these comments in testimony before the US Congress tonight and tomorrow, including a key comment that she thought the US economy has “recovered substantially” since the Great Recession and that she expects further economic growth and firming inflation.
The Fed chair said she was confident that inflation will rise closer to target levels of 2% because of the strong jobs data (November’s jobs report is out tomorrow night), and signs of pickup in wage rises.
Comex gold futures hit their lowest settlement price in nearly six years, in the wake of the comments from Ms Yellen supported the likelihood that the central bank will raise interest rates when it meets ion December 15-16.
Gold for February delivery fell $US9.70, or 0.9%, to settle at $US1,053.80 an ounce. The settlement was the lowest since February, 2010. The price eased to around $US1.052 an ounce in early Asian trading.
Comex March silver also lost 7.4 cents, or 0.5%, to $US14.009 an ounce. And Comex March copper fell 3.9 cents, or 1.9%, to $US2.033 a pound.
US oil futures settled under $US40 a barrel this morning, our time. January crude futures settled at $US39.94 a barrel in New York, down $US1.91, or 4.6%.
That was the lowest settlement since August 26 of this year. Prices later recovered the $US40 a barrel level, despite another rise in US oil stocks.
In London, Brent crude fell $1.34 cents, or 3%, to $US43.10 a barrel ahead of the end of year Opec meeting in Vienna on Friday night, our time.
