Global stock markets and oil fall, dollar rises after surprising US data
NEW YORK (Reuters) – Stocks around the world were set for their longest losing streak in eight months on Wednesday, as weaker commodities weighed and the dollar gained after US data provided some surprises.
The euro turned slightly lower after the dollar strengthened against a basket of major currencies following US data showing a rise in retail sales data last month and an uptick in underlying inflation, which cemented expectations for further US interest-rate hikes.
The US Treasury yield curve flattened to a 10-year low after the data, as fixed-income investors also priced in further interest-rate hikes.
“With signs that underlying inflation pressures are starting to pick back up again, we think the Fed will need to step up the pace of tightening next year, raising the Fed funds rate a total of four times in 2018,” Michael Pearce, a US economist at Capital Economics in New York, said in a note.
The MSCI world equity index, which tracks shares in 47 countries, was set for its fifth straight day of declines, its longest run in the red since March.
With a slide in crude-oil prices, worries about the demand outlook and weaker metals prices weighing on stocks around the world, some investors took profits ahead of year-end.
“We’ve had 10 months of gains,” said Andrew Frankel, a co-president of Stuart Frankel & Co. in New York. “You have a need for some sort of pullback. Down less than 1 percent is not a major move here. In my view it’s a blip.”
Lifted by steady economic growth, supportive monetary policies and rising corporate earnings, global equities have rallied this year, with indexes in the United States and Europe recently scaled record highs, and Japan’s Nikkei last week climbed to a 26-year peak.
In early afternoon trading, the Dow Jones Industrial Average fell 80.34 points, or 0.34%, to 23,329.13, the S&P 500 lost 7.84 points, or 0.30%, to 2,571.03, and the Nasdaq Composite dropped 16.52 points, or 0.25%, to 6,721.35.
The pan-European FTSEuro-first 300 index lost 0.35%, and MSCI’s gauge of stocks across the globe shed 0.39%.
MSCI’s broadest index of Asia-Pacific shares outside Japan had earlier fallen 0.7%. Japan’s Nikkei lost 1.6%.
Oil prices were down for a fourth consecutive session, but they trimmed some losses after US inventory figures showed an increase in refining runs and a drop-off in distillate stocks.
US crude fell 0.61% to $55.36 per barrel, and Brent was last at $61.84, down 0.59% on the day.
Benchmark 10-year notes last rose 7/32 in price to yield 2.3576%, from 2.381% late on Tuesday.
The 30-year bond last rose 18/32 in price to yield 2.8112%, from 2.839% late on Tuesday.
Base metal prices fell as China data stoked fears of a slowdown in the world’s top commodities consumer.
Gold reversed earlier gains after the US data. Spot gold dropped 0.2% to $1,278.18 an ounce.