Investors shy away from risky assets

US TREASURY yields and the dollar dropped to seven-month lows yesterday and world stocks slid as political uncertainty from the US to the Middle East and weakness in commodity markets pushed investors away from risky assets.

The yen and gold also gained amid prevailing caution as an Arab rift opened up around Qatar, and ahead of testimony from the former head of the FBI, a British election and the European Central Bank’s next move, which all happen tomorrow.

Wall Street was lower for a second day after both European and Asian stocks dropped during their sessions.

The Dow Jones Industrial Average fell 31.09 points, or 0.15 percent, to 21 152.95 points, the S&P 500 lost 5 points, or 0.21 percent, to 2 431.1 points and the Nasdaq Composite dropped 6.70 points, or 0.11 percent, to 6 288.98 points.

“We’ve had a little bit of a cooling off in equities following the breaking of links with Qatar – a lot of people think it may force oil prices lower and remove some of the inflationary pressures,” said RBC economist Cathal Kennedy.

The pan-European FTSE-urofirst 300 index lost 0.66 percent and MSCI’s gauge of stocks across the globe shed 0.25 percent.

The broad Euro STOXX 600 was down 0.7 percent while German stocks were down 1.05 percent.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.2 percent lower, while Japan’s Nikkei lost 0.95 percent.

US crude fell 0.38 percent to $47.22 (R602.30) per barrel and Brent was last at $49.19, down 0.57 percent on the day. – Reuters