Revived prospects of an early U.S. interest rate rise, possibly as soon as June, lifted the dollar to a near two-month high, today, and left stocks, bonds, commodities and emerging markets all nursing losses. In key Asian markets, Hong Kong's Hang Seng index fell 0.7 percent; Singapore's Straits Times index slipped 1.3 percent; and South Korea's Kospi lost 0.5 percent. Japan's Nikkei 225 index and China's Shanghai Composite index both ended flat.European stocks took a bigger hit. The UK's FTSE-100 had slumped 1.3 percent, while Germany's DAX had slipped 1.2 percent and France's CAC-40 had dropped 0.9 percent in intra-day trade.European bond markets were under pressure, on anticipation of higher global borrowing costs on the back of any U.S. rate hike.Fed fund futures showed that the probability of a June U.S. rate increase rose to 34 percent after the release of the FOMC minutes, from 19 percent earlier in the day, 15 percent on Tuesday, and less than 1 percent a month ago. But many are still skeptical the Fed will raise rates before Britain's June 23 referendum on whether to remain in the European Union, a risk noted by some Fed policymakers. July may be a stronger possibility.
News On AIR | May 19, 2016 6:39 PM
Revived prospect of early US rate hike boosts dollar, bashes bonds