Stocks edge lower as investors await US Fed meeting
NEW YORK (Reuters) – Global equity markets edged lower on Monday as a 2 percent drop in crude prices weighed on investor sentiment and traders awaited signals of a potential interest-rate increase this year from a meeting of Federal Reserve policy makers.
Shares in Europe advanced in early trade but turned lower after Wall Street opened. Longer-dated Treasury yields fell and the dollar was slightly higher against the euro and yen as investors looked to the conclusion of the two-day Fed meeting on Wednesday and a Bank of Japan meeting on Friday.
“With stocks starting to fall, we are looking at some upward momentum on longer-dated bond prices,” said Justin Hoogendoorn, the head of fixed-income strategy at Piper Jaffray in Chicago.
Traders have priced in a 26% chance of a rate hike in September and a 56% chance in December, according to CME Group’s FedWatch tool.
MSCI’s all-country world stock index fell 0.31%, while the pan-European FTSEurofirst 300 of leading regional stocks was off 0.07% to 1,343.19.
The Dow Jones Industrial Average fell 103.34 points, or 0.56%, to 18,467.51 in early afternoon trading. The S&P 500 slid 11.28 points, or 0.52%, to 2,163.75, and the Nasdaq Composite lost 11.45 points, or 0.22%, to 5,088.71.
Oil prices fell to two-and-ahalf-month lows amid worries that a global glut of crude and refined products would weigh on markets for some time.
Crude prices were trading at prices last seen in early May. Traders said oversupply and growing economic headwinds were weighing on oil.
Brent crude futures were down 1.86% to $44.84 a barrel, while US crude was down 2.08% at $43.27 a barrel.
The dollar has gained against major currencies in recent weeks as better-than-expected economic data revives expectations that the Fed will raise interest rates again this year.
The dollar edged higher against yen, at 106.10 yen, and was steady against the euro, at $1.0974.
Benchmark 10-year Treasury notes were little changed in price to yield of 1.5680%.
Euro-zone bond yields edged toward post-Brexit lows after the world’s biggest economies reiterated their commitment to using all policy tools to lift growth.
In a weekend Group of 20 meeting dominated by last month’s British vote to leave the European Union and by fears of protectionism, policy makers said they would use “monetary, fiscal and structural” tools to collectively support the global economy.
Euro-zone yields were broadly lower on the day, with German 10-year yields down 2.4 basis points, at minus-0.10% , within sight of the record low of minus-0.20% hit in early July.