U.S. currency gains after Evans suggests pace for rate hikes Energy shares lead S&P 500 lower; Stoxx 600 wipes out gain Share on Facebook Share on Twitter The dollar extended its longest winning streak in a month, while U.S. stocks slipped a second day as prices for oil, gold and emerging markets retreated amid increasing speculation that the Federal Reserve is moving closer to raising interest rates. The U.S. currency strengthened for a fourth day after Chicago Fed President Charles Evans joined officials who’ve said this week they expect to raise rates more aggressively than the market has priced. The greenback’s appreciation dragged lower the Bloomberg Commodity Index, which erased its gains from the past two days, while emerging-market stocks halted a five-day rally. Energy and raw-material companies led the Standard & Poor’s 500 Index lower, while European shares erased gains to slump a third day following explosions yesterday that killed at least 31 people in Brussels. U.S. monetary policy is in the spotlight after the Fed halved last week its projection for rate increases this year to two, a shift that spurred gains in global stocks and weighed on the dollar. The Chicago Fed’s Evans said Tuesday that projections for two rate hikes this year were for him “a pretty good setting�. That followed comments by two other policy makers in the past week that the central bank may lift rates as soon as the April meeting. Traders put the chances of an April move at 10 percent, according to futures data compiled by Bloomberg. The odds of a single 25-basis-point move by December were at 74 percent, climbing from 68 percent at the end of last week. “Nobody’s really looking to make a substantial bet at this point,� said Brad McMillan, chief investment officer of Commonwealth Financial Network in Waltham, Massachusetts, which oversees $100 billion. “The big story over the past couple months has been an absolute loss of confidence and then all of a sudden the return of that confidence. The market’s continuing to struggle with the implications of the Fed.� Currencies The Bloomberg Dollar Spot Index, a gauge of the greenback’s strength, rose 0.6 percent to a one-week high at 10:44 a.m. New York time. The greenback strengthened versus all 16 major peers. The pound weakened 0.5 percent to $1.4132, having slid 1.1 percent on Tuesday amid speculation the Brussels terror attacks will boost the case of campaigners who want to see Britain out of the European Union. A measure of price swings in the pound versus the dollar in three months, covering exactly the period leading up to the June 23 referendum, jumped to the highest level since June 2010. Stocks The S&P 500 retreated 0.3 percent, after transportation stocks weighed on the benchmark equity gauge on Tuesday. Data today showed sales of new homes rebounded by 2 percent, falling short of the 3.2 percent increase forecast by economists. Nike Inc. dropped 4.1 percent after its annual forecast missed analysts’ estimates. The Stoxx Europe 600 Index fell 0.2 percent, after climbing as much as 0.6 percent. While the bombings in Brussels initially hit European equities and fueled demand for haven assets on Tuesday, the impact on financial markets proved temporary. Terrorist incidents including the one in Paris in November and the London bombings in 2005 spurred equity selloffs that were erased in the following days and weeks. Credit Suisse Group AG added 2 percent after saying it will eliminate an additional 2,000 jobs this year and deepen cuts at the investment bank. Germany’s DAX Index rose 0.3 percent as Chancellor Angela Merkel’s Cabinet backed increases in German spending on defense and infrastructure in a budget plan that seeks to address global risks and the refugee crisis. Commodities West Texas Intermediate dropped 2.9 percent to $40.26 after a U.S. government report showed rising crude stockpiles kept supplies at the highest level in more than eight decades. Crude inventories rose 9.36 million barrels last week, according to the Energy Information Administration. A 2.53 million barrel supply increase was projected by analysts surveyed by Bloomberg. Stockpiles at Cushing, Oklahoma, the biggest U.S. oil-storage hub, dropped 1.26 million barrels from a record high. Gold in the spot market dropped to the lowest price in a month as the dollar rallied. The precious metal was 2.3 percent lower at $1,220.25 an ounce. Industrial metals declined, including a 2.5 percent drop in zinc to $1,825 a metric ton. Aluminum fell 0.9 percent. Sugar traded near the highest closing price in more than a year. Dry weather in areas where the crop is grown, such as Thailand, has led market forecasters to reduce their production estimates, sending futures soaring about 30 percent in the past month. Bonds The yield on U.S. Treasuries due in a decade fell two basis points to 1.92 percent, after climbing to the highest in a week. The benchmark German 10-year bund yield rose one basis point to 0.22 percent, after falling two basis points on Tuesday. The nation sold 810 million euros of 30-year securities in an auction that failed to draw enough bids to meet its target. Emerging Markets The MSCI Emerging Markets Index fell 1.1 percent, after rising 5 percent over the previous five days. A Bloomberg gauge of 20 emerging-market currencies fell 0.5 percent, paring its gain this month to 4.5 percent. Chinese stocks rose in late trading amid a revival in margin lending. The Shanghai Composite Index added 0.4 percent, with gains coming in the last 30 minutes of trading as technology companies rallied. Outstanding margin trading rose 2.2 percent, the most since Nov. 9, to 863.3 billion yuan ($133 billion) on Monday, data compiled by Bloomberg show.

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