The Malta Independent on Sunday

Markets react to Yellen speech

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Assets from developing-nation currencies to global stocks changed after Fed Chair Janet Yellen spoke to central bankers and economists in Jackson Hole, Wyoming. While she didn’t discuss the specific timing of a rate move in her first public comments since June, Vice Chairman Stanley Fischer said her remarks leave open the possibilit­y of an interest-rate hike in September. Lifting borrowing costs in the world’s largest economy could spur outflows from developing markets which have benefited from investors seeking higher yields.

The MSCI All Country World Index of stocks extended its weekly drop to 0.8 percent.

The Stoxx Europe 600 Index extended its weekly advance to 1.1 percent.

A gauge of volatility expectatio­ns for the region’s stocks is posting its lowest monthly average since March of last year, indicating how quiet the market has been. The calm was interrupte­d on Thursday, though, as European equities fell the most in three weeks after a report showed German business confidence unexpected­ly weakened to the lowest level in six months. That renewed concerns about the efficiency of European Central Bank stimulus to spur growth amid political turmoil. The Stoxx 600 has lost 6.6 percent this year, with banks slumping the most, while equities in the U.S. and Asia are up.

The MSCI Emerging Markets Index rose 0.4 percent to 901.39 on Friday, after falling as much as 0.4 percent earlier. The equity advance trimmed a weekly decline of 1 percent, its first since the beginning of July. A benchmark of currencies added 0.3 percent to limit a five-day retreat after also erasing an earlier drop.

Oil closed higher after swinging between gains and losses as investors parsed the speech by Federal Reserve Chair Janet Yellen for signs of when the central bank will raise interest rates. Futures climbed 0.7 percent Friday, trimming a weekly loss. Crude rose 2.4 percent earlier while the dollar slipped, boosting the appeal of commoditie­s as an investment.

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