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- Asian shares rose on Monday, extending an October rally, as investors hunted for bargains in industrials and basic materials, fueled by a rebound in commodities while the dollar struggled as hopes of a Fed rate rise this year grew even dimmer. Now is not the right time for the United States to raise interest rates, given the global economic situation, China’s Finance Minister Lou Jiwei said in an interview published in the China Business News on Monday. Speaking on the sidelines of the annual meeting of the World Bank and International Monetary Fund in Lima, Lou said developed economies were to blame for the global economic malaise because their slow recoveries were not creating enough demand. Lou’s comments were published hours after U.S. Federal Reserve Vice Chairman Stanley Fischer said policymakers were likely to raise interest rates this year, but that that was “an expectation, not a commitment”. An unexpectedly weak U.S. jobs report for September had led many investors to speculate that the Fed will not deliver its first hike since 2006 this year. Indeed, fed fund futures contract were indicating a rate hike only in 2016.
- Oil prices rose in early Asian trading on Monday after U.S. drillers cut oil rigs for six straight weeks, while traders awaited Chinese trade data to be published following the one-week National Holiday. U.S. drillers removed nine oil rigs in the week ended Oct. 9, bringing the total rig count down to 605, oil services company Baker Hughes Inc (BHI.N) said late on Friday. That total was the least since July, 2010. Drillers had cut a total of 61 rigs over the prior five weeks. Since hitting an all-time high of 1,609 during this week a year ago, weekly rig count reductions have averaged 20. Oil was also supported by a weaker U.S. dollar, since it makes imports for countries using different currencies cheaper.
- The U.S. dollar hit three-week lows against the euro as minutes from the Federal Reserve’s September policy meeting showed the Fed in no rush to raise interest rates. Data from China in coming days is likely to point to further weakness in the world’s second-largest economy, starting with import and export data to be published on Tuesday. Some investors fear the economy is at risk of a hard landing which could jeopardize an increasingly fragile international outlook, though most analysts forecast a slow deceleration, predicting that a raft of earlier support measures will gradually kick in. Later this week, the market may take its cues from Chinese trade data due on Tuesday, as well U.S. economic indicators such as retail sales data on Wednesday and the consumer price index on Thursday.
- Gold prices jumped in Asia on Monday as investors show greater confidence that the Federal Reserve will hold steady in October. In the week ahead, investors will be looking to Wednesday’s U.S. data on retail sales and Thursday’s data on consumer prices for fresh indications on the strength of consumer spending. On Monday, markets in Japan will be closed for a national holiday along with Canada. In the U.S., Chicago Fed President Charles Evans is to speak, while Fed Governor Lael Brainard is to speak at another event. Last week, Gold rallied to the highest level in seven weeks on Friday on the back of heightened expectations that the Federal Reserve will hold off on hiking interest rates until 2016. Gold would benefit from any delay in raising U.S. interest rates as higher interest rates make gold look less competitive against interest-yielding assets. A rate hike would also boost the dollar, which would make dollar-denominated gold more expensive to holders of other currencies.