US open: Fedspeak hits shares

Wall Street's main stock market averages fell back in the wake of the latest dose of Fedspeak and following disappointing results from aluminum maker Alcoa.

Speaking in Sydney, Chicago Fed president Charles Evans said progress on inflation had been unsatisfactory thus far.

Nevertheless, and on the subject of the next potential interest rate hike, he added that “one move isn’t that big of a deal either way”.

That was enough to send US Treasuries lower and spark selling in the equity space, pushing the yield on the benchmark up by three basis points to 1.75%.

Evans's remarks were made ahead of the release of the minutes of the Fed's last policy meeting and speeches from two more Fed speakers scheduled for the following session.

In turn, as of 1618 BST, the Dow Jones Industrial Average was off 0.87% to 18,160.57, the S&P 500 down 1.02% at 2,141.69 and the Nasdaq Composite was losing 1.11% %.

Jamieson Blake, retail sales manager at ADS Securities London, said: “It’s a relatively quiet day ahead in terms of economic data for US markets, although by all accounts the key release today will be Alcoa’s earnings update, nominally kicking off the quarter’s reporting season.

“As it stands, Wall Street is eyeing a slightly softer start with continued appreciation of the greenback making dollar denominated assets look generally expensive. This earnings season sits squarely on top of the closing phase of the US Presidential election, so any notable bias in the fortunes of corporates could end up tipping the balance in either direction. Alcoa is just the starting point here but it seems inevitable that this strand of news will provide another layer of volatility for markets in the coming weeks.”

Meanwhile, oil prices were weaker after racking up strong gains in the previous session when Russian President Vladimir Putin told an energy congress in Turkey that the nation was ready to join OPEC in a proposed curb on production. West Texas Intermediate was down 1.4% at $50.65 a barrel and Brent crude was off 1.6% to $52.28.

In currency markets, the dollar continued to gain ground, with the pound down 1.24% to $1.2208 as leaked Treasury documents suggested that leaving the single market could cost the UK £66bn a year in lost taxes.

On the corporate front, Twitter shares rose following a Reuters report on Monday that Salesforce is still mulling a bid for the company.

Stock in Alcoa crashed after the firm reported third quarter earnings per share of 32 cents (consensus: 33 cents) on sales of $5.21bn (consensus: $5.33bn).