- MSCI World index stable after hitting record highs for 7 days
- Wall Street slips, European stocks fall
- Japanese stocks fueled by stimulus hopes
- Euro appreciates against the dollar ahead of Thursday’s ECB meeting
- Aussie slips even as RBA goes ahead with tapering
WASHINGTON / MILAN, Sept. 7 (Reuters) – US stocks were mixed and global stocks retreated from record highs on Tuesday as investors balanced growing concerns about the slowing economic recovery and hoped the Federal Reserve will delay reducing its bond purchases.
Unofficially, the Dow Jones Industrial Average (.DJI) fell 0.76% to finish at 35,100 points, while the S&P 500 (.SPX) lost 0.34% to 4,520.03. The Nasdaq Composite (.IXIC) climbed 0.07% to 15,374.33, as Apple Inc (AAPL.O) and Netflix Inc (NFLX.O) both hit record highs.
The MSCI World Stock Index (.MIWD00000PUS) fell from an all-time high overnight, after seven consecutive days of gains at record highs. Earlier in the session, hopes of further stimulus in Japan and strong trade data from China had boosted Asian stocks.
“The combination of sky-high expectations, bleeding valuations and a slowing macroeconomic environment make the risk / return outlook less attractive,” said Jeffrey Carbone, managing director of Cornerstone Wealth in Huntersville, North Carolina.
European stocks retraced ahead of an ECB policy meeting on Thursday. The benchmark STOXX 600 (.STOXX) fell 0.5% but was not far from last month’s lifetime peak.
Data on Friday showed the U.S. economy created 235,000 jobs in August, the least in seven months as hires in the leisure and hospitality sectors stagnated, lowering expectations that the Fed will opt for an early reduction in its monthly bond purchases. Read more
The market took the surprisingly weak US wage report on Friday “on the heels, assuming the COVID-19 Delta variant had an impact on economic activity in August,” said Arthur Hogan, a strategist in August. Head of Markets at National Holdings in New York. in a market note.
Speeches by a number of U.S. policymakers later this week will be closely watched for any indication of the impact of the weak jobs report on the Fed’s plans to cut its bond purchases and maintain its expansive policy in the short term.
The recent equity rally began after Fed Chairman Jerome Powell’s conciliatory speech at the Jackson Hole Symposium in August.
“Given that prior to Jackson Hole, many FOMC members had spoken out in favor of a cut on a tight schedule, we’ll see if they confirm or align with Powell’s more moderate message,” said Giuseppe Sersale, fund manager at Anthilia.
US government bond yields rose on Tuesday, continuing the rise seen on Friday following the jobs report and ahead of a fairly busy week of Treasury auctions.
Japanese stocks strengthened further in hopes that the ruling Liberal Democratic Party will provide further economic stimulus and easily win the next general election after Prime Minister Yoshihide Suga announced he would step down. Read more
The Tokyo Nikkei (.N225) crossed the 30,000 mark for the first time since April, also helped by an announcement about its reshuffle, and the broader Topix Index (.TOPX) climbed 1.1% to reach a peak of 31 years.
Anthilia’s Sersale said investors had a defensive stance in Japanese stocks, which led to a short squeeze.
“I was positive on Tokyo (equities) and remain that way, but maybe at this point it’s better to look for a less overbought entry point,” he said.
Mainland Chinese stocks extended their gains, with the Shanghai Composite (.SSEC) rising 1.5% to its highest level since February, helped by Chinese trade data showing both exports and imports rose much more quickly than expected in August. Read more
The rout in bonds and shares of the China Evergrande group (3333.HK) worsened on Tuesday after further downgrades to the rating of the country’s second-largest developer.
The euro fell 0.24%, while the European broad index FTSEurofirst 300 (.FTEU3) fell 0.46%.
The ECB is seen debating a reduction in stimulus measures, with analysts expecting purchases under its Pandemic Emergency Purchase Program (PEPP) to fall, possibly as low that 60 billion euros per month against 80 billion euros current. Read more
The German 10-year rate reached its highest level since mid-July.
The Australian dollar rose briefly after the central bank continued its planned cut in bond purchases, but quickly abandoned those gains after the bank reiterated its need to see persistently higher inflation to raise interest rates .
The Aussie was down 0.7%, following its 1-1 / 2 month high set on Friday.
The US dollar appreciated 0.4% against a basket of other major currencies, putting pressure on gold prices. Spot bullion prices were down 1.6% at 4:10 p.m. EDT (2010 GMT). US gold futures were down 1.9% to $ 1,798.5 an ounce.
Elsewhere in commodities, oil prices fell amid concerns over weak demand in the United States and Asia. Sharp declines in contract crude oil prices for Asia in Saudi Arabia had previously rekindled demand concerns.
U.S. West Texas Intermediate crude stabilized at 94 cents or 1.4% from Friday’s close at $ 68.35 a barrel, and hit a session low of $ 67.64.
Brent crude futures stabilized at 53 cents, or 0.7%, at $ 71.69 a barrel, after falling 39 cents on Monday.
Reporting by Chris Prentice in Washington, Danilo Masoni in Milan and Hideyuki Sano in Tokyo Editing by Alex Richardson and Matthew Lewis
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