Global stocks fall as techs extend sell-off, dollar gains
NEW YORK (Reuters) – World stock indexes fell on Thursday as technology shares extended their recent sell-off, while the prospect of tighter monetary policy in the United States and Britain pushed up the dollar.
High global inventories and doubts about OPEC’s ability to implement agreed upon production cuts pressured oil prices.
The US Federal Reserve on Wednesday raised interest rates, as widely expected, and signaled another hike could follow this year. Its statement prompted worries for some investors that the tone was hawkish.
“When you look at the economic data, it really doesn’t point to an aggressive Fed,” said Paul Nolte, a portfolio manager at Kingsview Asset Management in Chicago. “But you listen to the comments [on Wednesday], they’re still on the aggressive side as far as raising rates.”
In a sign that the squeeze on consumers may get tighter before long, three Bank of England policy makers voted to raise rates against five for keeping rates on hold. Economists polled by Reuters had expected a 7-1 vote in favor of no change.
The recent sell-off in tech shares has been prompted in part by investors trying to take profits in an area that has led market gains this year and has fueled concern about stretched valuations in the overall market.
The US technology index was down 0.8%, leading a broad decline in the S&P 500, pulled down by heavyweights including Apple Inc. and Alphabet Inc. after bearish research comments. The tech index is down about 4% since Thursday’s close.
In early afternoon trading, the Dow Jones Industrial Average was down 43.57 points, or 0.2%, to 21,330.99, the S&P 500 had lost 11.44 points, or 0.47%, to 2,426.48, and the Nasdaq Composite had dropped 55.35 points, or 0.89%, to 6,139.54.
The pan-European FTSEurofirst 300 index lost 0.3%, and MSCI’s gauge of stocks across the globe fell 0.9%.
The dollar rose to its highest in more than two weeks as solid readings on the US economy helped strengthen the case for the Fed to continue tightening.
The number of Americans filing unemployment claims fell more than expected last week, suggesting slack in the labor market was shrinking, and the Philadelphia Fed business conditions for June beat expectations after a strong reading in May.
The reports followed weak inflation data on Wednesday.
The dollar index, which tracks the US currency against six major peers, rose to 97.557, its highest since May 30.
The stronger-than-expected US economic data also boosted US Treasury yields, with twoyear yields touching their highest in three months. But most yields remained depressed after their biggest plunge in a month on Wednesday.
US two-year yields hit 1.368%, their highest in three months.
Brent crude oil was down 0.3% to $46.87 a barrel after hitting its weakest since May 5. US light crude was down 0.6% to $44.46.