Goldilocks fights back but bears still swinging
london — The fight between Goldilocks bets — on the not too hot, not too cold global economy — and market bears who have delivered some hefty blows in recent weeks, continued on Tuesday with little sign yet of a clear winner.
Stocks see-sawed with solid gains in China and other Asian emerging markets offset by a tumble in Japan and then a red start for most of Europe’s bourses and Wall Street futures in New York.
By 11.09am ET, the Dow Jones Industrial Average was down 96.29 points, or 0.39 per cent, at 24,504.98, the S&P 500 was down 8.64 points, or 0.33 per cent, at 2,647.36 and the Nasdaq Composite was down 6.63 points, or 0.09 per cent, at 6,975.34.
Tokyo’s 0.65 per cent fall had been compounded as the yen hit a five-month high amid a renewed bout of dollar weakness which had also helped lift bond and commodity markets after recent turbulence.
Copper, one of industrial metals seen as a sensitive gauge of global economic health, climbed over 1.3 per cent, while Asia’s overnight gains kept MSCI’s 47-country world stocks index up 0.2 per cent despite Europe’s subdued start.
“As long as we don’t get dragged into (a US) recession the market tends to recover quite quickly,” said Donough Kilmurray, managing director, Investment Strategy Group at Goldman Sachs, seeing only a 10 per cent chance of that this year.
Still, caution lingered in the broader markets following the USled tumble in riskier assets last week and ahead of US inflation data on Wednesday. A strongerthan-expected reading on price pressures could trigger a fresh wave of selling. World markets’ main ‘fear gauge’, the VIX volatility index was nudging higher again after two days of easing back.
The currency market remained choppy too.
Britain’s pound was briefly jolted to a session high of $1.3924 after headline annual UK inflation came in at 3.0 per cent, a tenth of a point above forecasts and holding close to its highest level in nearly six years.
The data highlighted the challenge the Bank of England faces as it tries to return price growth to target over the next two years.
The dollar’s index against a basket of six major currencies fell over 0.4 per cent to 89.923 as the bears returned. Last week had been the greenback’s best since 2016.
It was 0.3 per cent lower at 108.285 yen, while the euro added 0.2 per cent to $1.2322 and the Swiss franc also made ground.
“The (US) consumer prices numbers (on Wednesday) bear close watching as if it shows a strong rise, that could rattle US long-term yields,” and currencies and stocks said Koji Fukaya, president of FPG Securities in Tokyo.
The 10-year Treasury note yield — which moves inverse to its price — fell back under 2.83 per cent in Europe trading after rising to a four-year peak of 2.902 per cent on Monday. — Reuters