Markets suddenly quiet after volatile period

Share Markets: 

The US stockmarket had a quieter session on Friday night, with the Dow off 0.1%, the S&P 500 up 0.1% and the Nasdaq gaining 0.3%.

This followed strong gains in China on Friday, with the Shanghai Composite up 4.8%.

Interest Rates: 

US government bond yields edged higher at the short end as comments from Fed officials indicated September or October as potential dates for the Federal Reserve to start hiking interest rates.

The Jackson Hole central bankers' symposium generated comments from Fed FOMC members regarding the timing of the start of the tightening cycle.

Minneapolis Fed President Kocherlakota did not want to be hasty, Cleveland Fed President Mester and St. Louis Fed President Bullard appeared to lean towards September, and Fed Vice Chair Fischer and Atlanta Fed President Lockhart wanted to check the impact of recent market volatility on the economy before deciding. 

Foreign Exchange:

The US dollar index rose by around 0.9% on Friday night amid discussion of the timing of a Fed rate hike. The Euro fell from 1.1310 to 1.1156.

The US dollar also gained against the Yen, with USD/JPY rising from 120.65 to 121.75. Sterling eased slightly against the US dollar, struggling to hold onto earlier gains following the release of solid UK economic data.

The Aussie dollar lost ground on Friday, but partially retraced on a lift in risk appetites on Friday night. AUD/USD fell from 0.7206 on Friday morning, to currently trade at 0.7162 at the time of writing.


A lift in risk appetites supported commodity prices. The oil price rose by US$2.70 to US$45.20 per barrel, its highest since early August.


There was no local data to report.


Industrial profits in China during the year to July fell 2.9%.

Softer demand combined with weaker prices contributed to the decline. During 2013, industrial profits grew at an annual pace of 25% but since then the pace has generally declined.


German CPI remained at 0.2% in the year to August. However, details from some States suggest prices excluding energy are rising.


Japan's jobless rate fell to 3.3% in July from 3.4% in June. Japan also has a very low rate of inflation with an annual rate of just 0.2% in the year to July.  This was down from 0.4% in the year to June.

Retail sales in Japan rose 1.6% in the year to July. This result beat expectations and was firmer than the 0.9% rise seen in the year to June.

United Kingdom:

GDP rose 0.7% in Q2, in line with consensus expectations. For the year to Q2, UK GDP rose 2.6%, an unchanged pace from the previous quarter.

Exports were a key driver of growth, rising 3.9% in Q2, while business investment was also strong, gaining 2.9% for the quarter.

United States:

Personal income rose 0.4% in July, after rising 0.4% in June. Personal spending rose 0.3% in July, after rising 0.3% in June.

The savings rate lifted from 4.7% in June to 4.9% in July. The Atlanta Fed revised down its model prediction for Q3 GDP from 1.4% to 1.2% in the wake of these results.

The PCE deflator, the Fed's preferred measure of inflation held at 0.3% in the year to July, with the core measure easing to 1.2% in the year to July, down from 1.3% in the year to June.

The University of Michigan consumer sentiment index fell to 91.9 in August, from a preliminary estimate of 92.9. The largest decline was in the current conditions component, reflecting financial market volatility in late August.

Topics:  economy st george

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