The dollar was strong against weaker commodity prices this week. The yuan hit a six-month high, while the pound remained volatile on uncertainty over Scotland’s future with the U.K.
Global markets responded poorly to a statement from the San Francisco Fed that mentioned the potential for earlier than expected interest rate hikes by the Federal Reserve. This exacerbated concerns over “what happens after QE,” sending most equities into a brief tizzy. This has been a recurring theme all year; it would appear that central banks are gauging how the market reacts to rate increase announcements as a stress test of sorts, waiting until the response is more muted before acting.
China’s Hang Seng Index had an awful Tuesday, tanking more than 2%. This marked the worst week for the index in six months. The combination of the Scotland news and the report released by the San Francisco Fed forecasting looming interest rate hikes had the effect of spooking the markets, sending global stocks on one of their worst nosedives in a month. Asian stocks were generally down, continuing their longest streak of sessions in the red in over four years.
After stock in Apple dropped from its all-time high last week on rumors of a security breach of the company’s iCloud, the tech giant was back in force with a tripartite announcement this week. In addition to the simultaneous unveiling of the highly anticipated iPhone 6 and the Apple Watch, even more buzz was generated when the prospect of Apple Pay, the company’s new e-wallet, came to the fore. This new service poses a direct threat to other digital payment platforms such as PayPal. After sliding back below $100 per share, the stock recovered to $101.26 at Friday’s open, as the rest of the stock market was buoyed by Apple’s renewed strength.
Gold and silver continued last week’s slide in earnest, as gold opened at a three month low of $1,255 on Monday and sat at $1,235 by Friday’s open. After a slight recovery on Tuesday, silver slipped below the $19 mark for the first time since early June. Following the shutdown of South Africa’s (and indeed the world’s) largest platinum mine, the white metal was battered all week, dropping to below $1,360 after closing last week near $1,410. Its Platinum Group cousin palladium followed the trend, plunging from an $891 open on Monday to around $826 by Friday morning.
Each of the major U.S. stock indices recovered on Wednesday after posting steep losses on Tuesday. This came on the news that Scotland’s resolve appears strong ahead of next week’s independence referendum. Many large institutional investors in the U.S. and Europe appear worried that Scottish independence could hurt their investments in Scotland and the U.K. After opening above 2,000 on Monday, the S&P 500 fluctuated within a tight range all week. The Dow opened the week at 17,131.71, briefly slipping just below 17,000 on Tuesday before opening above 17,050 on Friday. Thanks to a surge in biotech stocks, the Nasdaq made up almost all of its losses by midweek after Tuesday’s 40point loss, erasing a drop of nearly 0.9%.
By Everett Millman, head content writer at Gainesville Coins, a leading gold and silver distributor.