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Stocks Turn Lower as Investors Eye Outlook for U.S. Rate Hike

U.S. benchmark crude oil futures gained 3 cents to $49.86 a barrel in electronic trading on the New York Mercantile Exchange
By The News · 06 of October 2016 08:44:19
A pair of specialists study a screen at a post on the floor of the New York Stock Exchange, A pair of specialists study a screen at a post on the floor of the New York Stock Exchange, Wednesday, Oct. 5, 2016. Energy stocks are leading an early gain on Wall Street as the price of crude oil moves higher. (AP Photo/Richard Drew), photo: AP/Richard Drew

World stocks turned lower on Thursday after recent upbeat economic data appears to have increased the chances that the Federal Reserve will raise its key interest rate this year.

KEEPING SCORE: France’s CAC 40 was down 0.2 percent at 4,481 and Germany’s DAX shed 0.1 percent to 10,571. Britain’s FTSE 100 was roughly flat at 7,030. U.S. stocks were poised to open slightly lower. Dow and S&P 500 futures were down 0.1 percent.

RATE HIKE ON THE HORIZON: Activity at U.S. service companies expanded in September at the fastest pace in nearly a year, according to a private report. That added to evidence that the world’s biggest economy is strengthening and raised expectations the Federal Reserve will soon raise rates from ultralow levels. The services report and a similar manufacturing index earlier this week were both surprisingly strong after weak readings the month before. Investors will look to a monthly U.S. jobs report on Friday for further clues.

MARKET VIEW: The weakness in the August service and factory indexes “does now look to have been only been a temporary blip,” said Angus Nicholson of IG Markets in Melbourne. “The path to a December rate rise from the Fed is looking increasingly comfortable.”

BREXIT FACTOR: The British pound continued to drop on concerns that the country is moving ahead with its decision to the leave the European Union and could opt to leave the bloc’s tariff-less single market. That has weighed on the pound since Monday and it was down another 0.7 percent on Thursday, to $1.2666, touching its lowest level since the June 23 vote to leave the EU.

ASIA’S DAY: Japan’s benchmark Nikkei 225 index climbed 0.5 percent to close at 16,899.10 and South Korea’s Kospi gained 0.6 percent to 2,065.30. Hong Kong’s Hang Seng added 0.7 percent to 23,952.50 and Australia’s S&P/ASX 200 rose 0.6 percent to 5,483.00. Benchmarks in Singapore, Taiwan and Thailand also rose. Markets in mainland China were closed for a weeklong holiday.

ENERGY: Oil prices rose to their highest level since June. U.S. benchmark crude oil futures gained 3 cents to $49.86 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.14 the day before. Brent crude, the international standard, rose 7 cents to $51.93 a barrel in London

CURRENCIES: The dollar rose to 103.73 yen, its highest level in a month, from 103.50 yen in late trading Thursday, fueled by the Fed rate cut outlook. The euro slipped to $1.1183 from $1.1210.