U.S. stocks pare losses, oil up as markets reassess central banks

NEW YORK – U.S stock prices were slightly higher at midsession Monday after a Federal Reserve policymaker expressed caution about the need to raise U.S. interest rates, though European and Asian equities finished lower after the biggest fall on Wall Street since June on Friday.

Federal Reserve officials have raised the chances of another interest rate rise this year in the past few weeks and the European Central Bank and Bank of Japan have also refrained from further monetary policy easing recently, culminating in Friday’s revaluation of stocks after U.S corporate earnings fell for the fifth straight quarter.

Federal Reserve governor Lael Brainerd is also due to make a speech in Chicago later Monday, the last policy maker to speak before next week’s Fed policy meeting.

At 11:45 a.m. ET (1545 GMT), the Dow Jones industrial average .DJI was up 72.38 points, or 0.4 percent, to 18,157.83; the S&P 500 .SPX had gained 11.92 points, or 0.56 percent, to 2,139.73 and the Nasdaq Composite .IXIC had added 43.52 points, or 0.85 percent, to 5,169.43.

A gauge of equities across major markets .MIWD00000PUS fell 0.3 percent after losing 1.0 percent earlier. European stocks .FTEU3 were down 1.0 percent, cutting an earlier loss in half.

U.S. stocks began to recover Monday morning after Atlanta Federal Reserve Bank president Dennis Lockhart said current economic conditions warrant a “serious discussion” of whether to raise interest rates at next week’s Fed meeting, also telling reporters there was no “urgency” to act.

“Lockhart helped assuage fears that a rate hike in September was imminent,” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

U.S. DOLLAR YIELDS, OIL UP

The U.S. dollar slipped against the Japanese yen on Monday as uncertainty surrounding the potential Federal Reserve rate hike this month fueled a selloff in riskier currencies, while speculation less monetary policy easing from the Bank of Japan also helped the yen.

The greenback was last down 0.66 percent against the yen at 102 yen and was little changed against the euro at $1.123.

The benchmark U.S. Treasury yield US10YT=RR turned higher midsession Monday and hit a session high of 1.697 percent, the highest since late June.

In commodities markets, crude oil prices turned positive with traders citing a weaker U.S. dollar.

Brent crude futures LCOc1 were up 1.1 percent at $48.58 a barrel, having recovered from a session low of $46.90, while U.S. crude CLc1 rose from an intraday low of $44.72 to trade at $46.47, up 1.2 percent.

The biggest fall in U.S. crude oil inventories since 1999 last week, and hopes for a deal between Saudi Arabia and Russia on stabilizing crude output at this months OPEC meeting, have helped to support oil prices in the past week

Adding to Monday’s jittery markets mood, U.S. Democratic presidential candidate Hillary Clinton fell ill at a Sept. 11 memorial ceremony and had been diagnosed with pneumonia.

Markets have generally assumed Clinton would win the presidency and have not truly considered the implications, both economic and for national security, should her rival Donald Trump prevail. – Reuters

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