The minutes suggested the central bank will remain on a tightening path
Wall Street stocks came off session lows but finished lower overnight as investors digested minutes of the Federal Reserve’s July meeting. The document indicated policy makers were prepared to keep lifting rates but some policymakers were wary of overdoing tightening. In general, the minutes suggested the central bank will remain on a tightening path in coming months. Against this backdrop, the Dow Jones fell 0.5% to snap a five-day winning streak, the S&P 500 dropped 0.7%, and the Nasdaq Composite gave up 1.3%.
Asian stocks followed US counterparts lower on Thursday after the Fed hinted at support for more aggressive interest rate hikes. Adding to a more downbeat tone in the region, Goldman Sachs slashed its growth outlook for the Chinese economy following another weak round of data revealed earlier this week. The Shanghai Composite Index lost nearly 0.5% and the Nikkei 225 in Tokyo sank 0.96%. The Hang Seng in Hong Kong shed 1.17% while the Kospi in Seoul gave up 0.33%.
In Europe, equities were little changed at the open, struggling for direction as risk tones are looking a bit shaky now. The pan-European Stoxx 600 was fractionally lower in early deals. In his latest remarks, ECB executive board member Isabel Schnabel noted that inflation concerns before July rate hike have not been alleviated and inflation could still accelerate in the short-term. It looks like Schnabel is sending out a firm message that the central bank will look to continue with another big rate hike next month. US stock index futures are slipping marginally in early pre-market deals.
Meanwhile, the dollar is seen slightly firmer across the board, extending gains for the sixth session in a row. The USD index is approaching the 107.00 figure that capped gains earlier this month. Should the greenback overcome this barrier any time soon, the 107.45 intermediate resistance zone will come back into the market focus. Later in the day, the buck could be affected by US existing home sales and the weekly initial jobless claims data.