US stock index futures fell this morning (August 19th) in pre-market trading over concerns about the volatility of the Chinese market and as investors await the minutes from last month's Federal Reserve meeting. They are looking for clues as to when interest rates will start rising.
At 08:53 ET, the S&P 500 was down 0.3 per cent to 2,096.92, the Dow Jones edged down 0.2 per cent to 17,511.34 and the Nasdaq Composite dipped 0.6 per cent to 5,059.35.
The Shanghai Composite Index dropped earlier today, falling five per cent at one point, but reversed its losses to finish 1.2 per cent higher. The gain comes a day after plunging six per cent as investors sold Chinese stocks fearing that the yuan may fall further.
The volatility of Chinese stocks and the health of the world's second largest economy weighed on investors' minds in Asia. The yuan fell about three per cent last week in a move aimed at boosting Chinese exports.
Investors also await the Federal Reserve's minutes from its July meeting due later today, which is expected to provide some clues about the timing of a US interest rate hike.
Two rate hikes likely this year
Many analysts believe the Fed will raise rates twice this year, with the first hike coming in September. New York Fed President William Dudley said last week that the central bank is approaching the moment when it can start raising interest rates.
Meanwhile, Federal Reserve Chairwoman Janet Yellen said that a rate hike is on the cards for 2015. She added that if the US economy continues to strengthen, "it will be appropriate at some point this year to take the initial step to raise the federal funds rate".
"The market will be most interested in where US inflation comes in, because this is something that will determine not just when the Fed begins to normalise policy but also the pace at which they tighten, going forward," Barclays FX strategist Hamish Pepper told Reuters.
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