Monday May 30th

30-05-2016

European stocks choppy after Yellen comments; DAX hits 1-month high

European markets traded slightly higher on Monday as investors digested comments from Federal Reserve Chair Janet Yellen who suggested a rate hike in the next few months is appropriate. The pan-European STOXX 600 was 0.1 percent higher. Germany's DAX index was around 0.4 percent higher, and hit a one-month high, while the French CAC 40 was 0.15 percent higher. London's FTSE 100 is closed on Monday due to a public holiday and volumes across Europe are expected to be low. U.S. markets are also closed for Memorial Day. Asian markets were mixed on Monday, as the dollar strengthened against Asian currencies. Japan's benchmark's Nikkei 225 index closed up 1.39 percent, or 233,18 points at 17,068.02, as the yen weakened against the rising dollar and on media reports that a planned hike in the country's consumption would be delayed. Chinese markets pared back earlier losses: Shanghai composite closed up 0.1 percent, at 2.818 points at 2,823.864 and the Shenzhen composite closed lower by 0.457 percent, or 8.264 points at 1,798.774. Oil prices dipped to around $49 a barrel on Monday as Iraq raised its crude exports target ahead of an OPEC meeting while Canadian production was set to restart after huge wildfires. Attention turned to a meeting by the Organization of the Petroleum Exporting Countries (OPEC) in Vienna this week, although most analysts did not expect any changes in the group's production. While the group has been unable to agree on an output freeze in an effort to support prices, Iraq was the latest Middle East producer to raise its exports quota ahead of the meeting, supplying 5 million barrels of extra crude to its partners in June. Brent crude futures were at $48.97 a barrel at 0959 GMT, down 35 cents in a third straight day of declines. U.S. West Texas Intermediate (WTI) crude futures were trading at $49.13 per barrel, down 20 cents. The strengthening of the dollar on higher expectations for a near-term U.S. interest rate hike further weighed on greenback-priced commodities. Gold fell below $1,200 for the first time since mid-February on Monday, as comments from Federal Reserve chief Janet Yellen on the likelihood of higher U.S. interest rates sent the dollar to two-month highs. The Fed should increase interest rates "in the coming months" if the economy picks up as expected and jobs continue to be generated, Yellen said on Friday, bolstering the case for a rate hike in June or July. St. Louis Fed President James Bullard said on Monday that global markets appear to be "well-prepared" for a summer rate hike, although he did not specify a date for the policy move. An increase in rates would raise the opportunity cost of holding gold, which does not earn interest. It would also bolster the dollar, making gold more expensive for other currency holders. Gold fell as much as 1.1 percent to $1,199.60 an ounce, its lowest since Feb. 17, and was down 0.6 percent at $1,204.18 an ounce by 0853 GMT. The metal was on track for nine sessions of losses, its longest losing streak of since March 2015.