The Federal Reserve are Expected to Raise Interest Rates
Asian markets closed higher on the first trading of the week. The gains were experienced during the Asian session despite the fact that the housing data in the US on Friday came at much softer level than expected. However, this has increased expectations among investors that Fed may not start tapering in their September meeting and the ultra loose monetary policy may continue. If the tapering does take place this could certainly hurt the emerging markets more as investors could start pulling out of these markets and start investing that money back in the developed economies to get a better return on their return. Tapering could also result in re pricing of the treasury yield and the 10 year yield could increase further by almost 2%.
The Shanghai index was the best performing index during the session which closed with a gain of 1.87%. The index is up nearly 1.37% for the past five days. The Hang Seng index was the second best performer and closed with a gain of 0.73%. Finally, the Nikkei index closed in a negative territory and closed with a loss of 0.18%.
Gold miners were one of the best performers during the session as the commodity prices started to bounce back once again. Shares of gold miners such as Newcrest Mining Ltd and Kingsgate Consolidated Ltd both gained nearly 7.4% and 8.5% respectively.
European stock markets are trading mostly lower during the early hours of trading. Political turmoil has occupied the stage in the Europe as Angela Merkel, the German chancellor fighting for another round of election while defending her position for bailing out Greece. The Chancellor confirmed today there will be no haircut for Greece however, there could be another aid package for the country. Officials from Greece has confirmed that the country may need another bailout payment and the size of this could be near the 10 billion euro however, Greece will not accept any further austerity conditions from its lenders. The FTSE MIB index is the worst performer and is trading down with a loss of -1.14%. The CAC 40 and the IBEX are trading lower with a loss of -0.01%, and -0.03% respectively.
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