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Reuters

World stock indexes fell on Monday as a Federal Reserve official’s comments added to investor concerns the bank may start raising interest rates in September, while oil prices jumped more than 8 per cent, extending their biggest price surge in 25 years.
The S&P 500 registered its biggest monthly percentage drop since May 2012 after being pummeled in the past two weeks on concerns about slowing growth in China.
US crude oil futures jumped 8.8 per cent, helped by a downward revision of US crude production data and OPEC’s readiness to talk with other producers.
Fed Vice Chairman Stanley Fischer said in a speech at the annual Jackson Hole, Wyoming, central bankers’ symposium over the weekend that US inflation was likely to rebound, allowing rates to rise gradually.
Many analysts took Fischer’s comments as a sign the Fed would raise rates in September, instead of December. That shook already jittery stock investors.
"If they move in September, it’s going to cast a lot of doubt about where they will stop," said Stephen Massocca, chief investment officer at Wedbush Equity Management LLC in San Francisco.
The Dow Jones industrial average fell 114.98 points, or 0.69 per cent, to 16,528.03, the S&P 500 lost 16.69 points, or 0.84 per cent, to 1,972.18 and the Nasdaq Composite dropped 51.82 points, or 1.07 per cent, to 4,776.51.
The Dow, down 6.6 per cent for August, registered its worst monthly percentage decline since May 2010. The Nasdaq, off 6.9 per cent for August, and the S&P 500, down 6.3 per cent, both posted their worst months since May 2012.
MSCI’s all-country stock index lost 0.7 per cent and was down 7 per cent for the month, also the worst monthly drop since May 2012.
The pan-European FTSEurofirst 300 stocks index closed down 0.2 per cent and registered a monthly loss of 9 per cent - its worst monthly performance since August 2011.
The dollar eased against the safe-haven yen and the low-yielding euro as investors sold equities and pared bets against currencies popularly used to fund risky carry trades.
But Fischer’s comments limited the dollar’s losses. The dollar shed 0.4 per cent to 121.19 yen, while the euro rose 0.5 per cent to $1.1236.
US crude oil prices have risen more than US$10 a barrel in three days, erasing the month’s declines.
US crude jumped $3.98, or 8.8 per cent, to settle at $49.20 a barrel, taking three-day gains to 27.5 per cent, the most over three days since August 1990. In dollar terms, it was the biggest three-day gain since February 2011. Brent October crude climbed 8.2 per cent to settle at $54.15 a barrel.
In the US bond market, longer-dated US Treasuries prices fell after lower US oil production and OPEC’s readiness to talk with other producers heightened inflation fears. Fischer’s comments hurt shorter-dated prices.
US 30-year Treasury bonds were last down 31/32 in price to yield 2.96 per cent, up from a yield of 2.91 per cent late Friday. Benchmark 10-year Treasuries were last down 8/32 to yield 2.21 per cent, from 2.18 per cent late Friday. Yields move inversely to prices.
Gold steadied, with spot gold up 0.04 per cent at $1,134 an ounce.
 


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Traders work the floor of the New York Stock Exchange as shares fell over fears the US Federal Reserve could raise rates this month. Photo: AP

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